In this episode we talk about the discrepancy between the average market return compared to the average investors return (Hint: It’s quite large).
Running Time: 13:05
In this episode:
- We know we should be buying low and selling high but we don’t.
- On average we’re not smart investors.
- We’re hard-wired to be irrational investors
- “The flat earth society still exists” – speaking of Warren Buffett’s comments on teaching people value investing. Some people will never get it.
- Dalbar Inc. is the company that many investors cite as a resource for more than thorough analysis of companies
- Investors usually try to look for a pattern in the market, then invest, when they should have invested before they waited to see the pattern.
- A story about one of our favorite money managers, Jeff MacDonald and what he was worried about in the 90′s when everyone was buying up all the technology stocks.
sometimesalways smart to look at industries with a logical mindset. (When Oil was at $10 a barrel, it HAD to go up, the demand couldn’t possibly go down)
- When you fail as an investor, it’s difficult not to remember where you think went wrong.
- What significance do the “star ratings” on stocks have?
- The star rating system will lead you to expensive companies. If you’re picking the five star stocks, you’re almost certainly over paying.
- It’s a lot safer to fail conventionally than to succeed unconventionally. It’s easy to listen to the analyst and invest in what everyone else is putting their money in to. It’s much more difficult to find the one to two star stocks and rationally invest, knowing full well that the company is undervalued and has no where to go but up.
Chart Source: Dalbar Inc.