The Real Reason Most Investors Underperform Their Investments
Here’s a stat that surprises almost everyone: most investors underperform the very investments they own.
The reason isn’t bad markets or bad products — it’s bad timing.
People buy high and sell low. That’s the opposite of the right way to do it.
When markets are up, confidence goes up — people add money.
When markets are down, fear takes over and they pull money out. Rinse and repeat.
It’s not an intelligence issue; it’s an emotion issue. It’s almost like we are programmed to lose. The data proves it. DALBAR studies show investors consistently lag the funds they invest in by several percentage points per year, simply because of when they increase or decrease risk.
This is a common one for me:
Client - “Brandon, I was thinking about taking a little risk out here, because of ______.”
Me- “Oh you want to time the market?”
Then that same client wants to increase the risk or buy some aggressive stocks when things are going well.
If asked, they would tell you they are not timing the market, but that is what is going on here and why some investors underperform the investments they own.
If you can separate how you feel about the market from what you do in the market, you’re already ahead of most people.
Discipline always beats emotion.
The market rewards patience, not panic.
