Save your cookie preferences

We use cookies to remember your site preferences, record your referrer and improve the performance of our site. For more information, see our cookie policy.

Please select an option below and 'Save' your preferences.

Save

You can update your cookie preferences at any time from the 'Cookies' link in the footer.

We use cookies (including third-party cookies such as Google) to remember your site preferences and to help us understand how visitors use our sites so we can improve them. To learn more, please see our privacy policy and our cookie policy.

To agree to our use of cookies, click 'Accept' or choose 'Options' to set your preferences by cookie type.

Options Accept

  • English
  • Deutsch
  • Español
  • Français
  • Italiano
  • Polski
  • 日本語
  • 简体中文
  • 繁體中文
  • Daily audit
  • Help
  • Contact
  • Deposit
  • Login
  • Open account
  • ABOUT US
    • About BullionVault
    • In the press
    • Reviews
    BUY/SELL BULLION
    • Live order board
    • Daily Price
    • Regular Investing
    INVESTMENT GUIDE
    • Guide to gold
    • -How to buy gold
    • -Gold investment
    • -Gold investment plan
    • -Investment insurance
    • -Compare asset performance
    • Guide to silver
    • -How to buy silver
    • Guide to platinum
    • -How to buy platinum
    GOLD NEWS
    • Gold news front page
    • -Gold price news
    • -Opinion & analysis
    • -Market fundamentals
    • -Gold/Silver Investor Index
    • -Infographics
    CHARTS
    • Gold price
    • Silver price
    • Platinum price
    • Price alerts
  • Login
  • Open account
  • BUY/SELL BULLION
  • Live order board
  • Daily Price
  • Regular Investing
  • INVESTMENT GUIDE
  • Guide to gold
    • ⤷
    • How to buy gold
    • Gold investment
    • Gold investment plan
    • Investment insurance
    • Compare asset performance
  • Guide to silver
    • ⤷
    • How to buy silver
  • Guide to platinum
    • ⤷
    • How to buy platinum
  • GOLD NEWS
  • Gold news front page
    • ⤷
    • Gold price news
    • Opinion & analysis
    • Market fundamentals
    • Gold/Silver Investor Index
    • Infographics
  • CHARTS
  • Gold price
  • Silver price
  • Platinum price
  • Price alerts
  • ABOUT US
  • About BullionVault
  • In the press
  • Reviews
  • Help
  • Contact
  • Daily audit
    • English
    • Deutsch
    • Español
    • Français
    • Italiano
    • Polski
    • 日本語
    • 简体中文
    • 繁體中文

Gold News

Live support

NEED HELP? ASK US NOW

Search form

Gold News front page

Gold Price News

Gold Price Gains as Dollar Drops, Selling from GLD ETF Erases 2019's Growth

More...

Gold Investing In Depth

Learn about gold bullion bars

Learn about gold bullion coins (and costs)

Gold investment: Why & how?

Gold Investment Analysis

  • Latest Gold Investor Index
  • Diversification: Gold as investment insurance
  • 40-year Asset Performance Comparison Table

Gold Articles

Opinion & Analysis

Gold Price News

Investment News

Gold in History

Gold Books

Gold Investor Index

Gold Infographics

Archive

  • February 2019 (21)
  • January 2019 (33)
  • December 2018 (28)
  • November 2018 (39)
  • October 2018 (38)
More...

List of authors

Yes, the Market Is Always Beating You

Tuesday, 7/28/2015 18:40
Wishful thinking starts with buying what you wished you already owned...
 
FEEL like the market's always beating you? asks Greg Guenther in Addison Wiggin's Daily Reckoning.
 
That might be because it is always beating you. You're about to learn why. And more importantly, how you can get out of that nasty trap...
 
The inflation-adjusted average annual return for the S&P 500 over the past 80 years or so is about 7%. So through bull and bear markets, long-term investors should be averaging about 7% per year. Not bad. With compounding, that's a truckload of money over time.
 
Except most investors aren't coming close to that. Instead of 7%, the average investor usually books an annual return closer to 3%. That's less than half!
 
Forget beating the market. Most investors can't even come close to matching it.
 
Why? The answer will surprise you.
 
The No. 1 reason the average investor can't book average returns is because he buys what he wishes he'd already bought.
 
That big idea is from Mark Yusko, CEO of Morgan Creek Capital Management. And it needs a bit of an explanation...
 
Investing is an epic battle. It's you versus the market. But it's also you vs. yourself. You're fighting all those counterproductive signals from that speck of grey matter that passes for your brain – and those "gut instincts" you swear made you a killing on that one big trade.
 
Even the best investors are emotional creatures so you're probably no exception. You see a red-hot stock's performance and it sets off your greed glands. You start imagining all the money you could have made if you just bought five years earlier when it first popped up on your radar.
 
But you made excuses. You wanted to see if the initial move higher held. Or you wanted to wait for a pullback that never came. Or maybe your psychic said it didn't align with Saturn. Whatever. The results are still the same.
 
You wished you'd bought at some point in the past. And that wish has led to an irrational need to buy now so you don't miss the next big move. So you buy now. That's fear taking over – the fear of missing out. Emotions win again. And it usually ends poorly. That stock's biggest gains are probably behind it.
 
Or the opposite could happen. You got burned on a stock five years ago you swore you'd never touch again. But it's since gone to rehab and delivering some big-time returns. Doesn't matter. You still won't go within a hundred feet of the thing. Your emotions have taken over – fear of loss this time. And so you miss out on a steep gain.
 
Of course there are other reasons why Joe Investor is falling behind.
 
He's buying the wrong stocks – then falling for the biggest lie in investing and throwing good money after bad. And he's too greedy at market peaks while too cautious near the bottom. These are boneheaded mistakes investors make all the time. And I think they both help explain the awful underperformance we're talking about today.
 
That brings us to another big question: Are investors making this same mistake today? Are they buying what they wish they'd bought years ago? Yusko thinks so...
 
Mark recently pointed out that there's a record amount of money going into index funds right now. The last time that happened? The year 2000. Yep, the very beginning of the dot-com bust.
 
I'm not surprised. Your average investor is always too late to the party. The punch bowl's about dry when he shows up.
 
Don't get me wrong – we'll ride this bull until it bucks us off. But jamming all your money into index funds in the sixth year of a historic bull market while fewer and fewer stocks are participating in the rally probably isn't the way to go. That's why we've been so selective lately.
 
If you want to match the market – and hopefully beat it – you've got to stop wishing, and start thinking.
 
You can't wish your way to riches.
  • Reddit logo
  • Facebook logo
  • Twitter logo
  • Google logo
  • Yahoo logo
  • LinkedIn logo
  • Digg logo
  • StumbleUpon logo
  • Technorati logo
  • del.icio.us logo

Publisher of Agora Financial, Addison Wiggin is also editorial director of The Daily Reckoning. He is the author, with Bill Bonner, of the international bestsellers Financial Reckoning Day and Empire of Debt, and best-selling author of The Demise of the Dollar.

Addison Wiggin articles

Please Note: All articles published here are to inform your thinking, not lead it. Only you can decide the best place for your money, and any decision you make will put your money at risk. Information or data included here may have already been overtaken by events – and must be verified elsewhere – should you choose to act on it. Please review our Terms & Conditions for accessing Gold News, RSS links are shown there.

Follow Us

Facebook Youtube Twitter LinkedIn

 

Mobile apps

 - live trading 24/7

 - buy & sell instantly

 - up-to-the-second charts

 

 

 

Daily news email
Go to 'communications settings' 

Get the latest daily gold price news free by email

Latest gold news by email

 

 

 

Gold Investor Index
5 February 2019

Gold Investor Index

Gold up, investing up!

 

 

 

CNBC TV-18
3 January 2019

CNBC TV-18

Gold jumps into New Year

 

 

 

Portfolio Adviser
19 October 2018

Vaulted large bar gold. Source: BullionVault

Beyond gold 'chatter'

 

 

 

Money Observer
6 August 2018

Bitcoin ain't gold

No, Bitcoin isn't "new" gold

 

 

 

  •  Email us

Market Fundamentals

  • Gold 'Set to Drive' Silver Price Gains in 2019
  • LBMA Gold Price Forecasts See Tight Range in 2019
  • Gold Mining M&A Now 'Easier' Than New Exploration
More...
  • Cost calculator
  • Cookies
  • Terms & conditions

©BullionVault Ltd 2005-

  • Twitter
  • Facebook
  • Google Plus
  • LinkedIn
  • YouTube