I have written many times over the years that “time in the market” is more important than “timing the market”. This is because equity markets tend to overdo on either directions. That is markets overshoot during bull markets to astronomical levels only to decline dramatically at some point to great depths. In both directions, investors …
Continue reading ‘S&P 500 Calendar Year Returns vs. Intra-Year Returns: Chart’ »
Investors in funds such as mutual funds and ETFs tend to earn lower returns than the funds they own over a time period. Many studies in the past have proven this theory. The gap in return between investors and funds is due to a variety of factors such as timing the market, lack of patience, …
Continue reading ‘On the Gap Between Investor Returns and Fund Returns’ »
Behavioral finance is an important subject that all investors need to educate themselves. As humans all our investment decisions are driven not always by facts and rational reasons. Emotions play a big part whether we are buying or selling a stock or any other asset. We also suffer from all types of bias from information …
One of the important concepts to be aware of with equity investing is the survivorship bias. Simply put this theory means ignoring losers and focusing on winners which can skew one’s thinking or results. For instance, hundreds of biotech firms are launched in the public markets but only a handful or even less are highly …
Continue reading ‘Why it is Important To Be Aware of Survivorship Bias in Equity Investing’ »
Multiple studies have shown that individual investors always tend to earn less than the funds they are invested in especially over the long-term. This is because many investors try to time the market and hence sell the mutual fund or ETF at the presumed peak and then buy back again at the wrong time as …
Continue reading ‘On The Gap Between Investor Returns And Fund Returns’ »