Investors Consistently Underperform Passive Investing

Updated: 4 days ago



So this is one of my favorite graphs, because it reinforces with an actual study in actual numbers, why not to do many of these emotional and behavior linked activities. So the bar chart on the bottom lists, asset class performance, a variety of asset class performance, and it's a 1998 to 2018 - 20 year time horizon.


With that it, you know, does catch the bulk of the tech bubble bursting, and then certainly the global financial crisis. And so you see, maybe a slight relative to long term averages, lesser amount of performance for equities, relative to other asset classes, but largely, I would generally ignore most of this information.


The reason why I share this piece and the reason why I like it so much, is it highlights that the average investors experience Participating in global financial markets is dramatically lower than that, that passive investments in index based exposures over time provide. I believe this is because there is often limited or no investment plan and that behavior and emotion drives most investors investment decisions.

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