 |
home >
writing tools and books > view
all books > irondoc
Empowered Investor: A Guide to Building Better
Portfolios by Keith Matthews
Price $15.95>> 
 Chasing
The Pot of Gold
Timing the Markets is a Loser’s Game
A recently-released study of U.S. investors by Dalbar, Inc.,
one
of North America’s leading financial-services research firms,
has rocked the industry. With results obtained by tracking aggregate
cash flows in and out of mutual funds on a monthly basis from 1984
through 2002, the Dalbar study was able to conclude the following
dismal results:
- The average U.S. equity investor earned 2.57% annually, below
the rate of inflation at 3.14%, and falling far short of the 12.22%
the S&P 500 earned for the last 19 years.
- The average U.S. bond investor earned 4.2% annually, compared
with the long-term government bond index of 11.70%.
These rates of return, it is worthy to note, are before taxes,
commissions, fees and transaction costs, and were tracked within
a period that included one of the best bull markets in history.
As one financial journalist noted dryly, “Investors would
have been better served to hide their money under the mattress.”
While it is important to note that these numbers represent the average
investor (the numbers can be skewed by a minority of investors who
make disastrous choices), the fact remains that the news is not
good. What went wrong?
>> Back to table of contents
|
