The biggest threat to most portfolios is not a crash, a scam, or a bad stock pick. It is the investor’s own behaviour — and it is remarkably consistent.
Buying high, selling low
Study after study shows the average investor underperforms the very funds they own. The reason is timing: money pours in near the top, when optimism peaks, and rushes out near the bottom, when fear does. The fund did fine; the investor’s emotions did not.
Why it happens
We are wired to flee danger and chase the crowd — useful on the savanna, costly in markets. Falling prices feel like danger; rising prices feel safe. Both feelings are usually backwards.
The fix
Automate. A fixed monthly investment, a written plan, and a rule against acting on headlines remove emotion from the moment it does the most damage.
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