FYI: (Always has been the Linkster's motto, when in doubt do nothing.)
The opening chapter of Larry's first book, “The Only Guide to a Winning Investment Strategy You’ll Ever Need,” published in 1998, is titled “Why Individual Investors Play the Loser’s Game.” The chapter presents his attempts to explain this anomalous behavior. It begins with a story about Galileo.
Regards,
Ted
http://www.etf.com/sections/index-investor-corner/swedroe-doing-nothing-best-option?nopaging=1
Comments
Year after year for many decades now, study after study have reinforced a very consistent finding: active trading is a loser's game. Here is a Link to one of these research findings:
https://www.umass.edu/preferen/You Must Read This/Barber-Odean 2011.pdf
You need not read the entire article. The summary paragraph paints the predictable dismal outcome for most individual investors:
"This research documents that individual investors (1) underperform standard benchmarks (e.g., a low cost index fund), (2) sell winning investments while holding losing investments (the “disposition effect”), (3) are heavily influenced by limited attention and past return performance in their purchase decisions, (4) engage in naïve reinforcement learning by repeating past behaviors that coincided with pleasure while avoiding past behaviors that generated pain, and (5) tend to hold undiversified stock portfolios. These behaviors deleteriously affect the financial well being of individual investors."
Wow!! All bad outcomes for the investor who trades frequently. There's an easy lesson from these data that is all to frequently ignored. Too, too bad.
Best Wishes