Category: Think Tank

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5 Responses to “Which Investment Behaviors Really Matter for Individual Investors?”

  1. [...] Which investment behaviors really matter for individual investors?  (Big Picture) [...]

  2. Stock Soup says:

    this study basically concludes that many behaviors we think of as bad don’t hurt returns such as

    * trend chasing
    * selling winners
    * turnover.


    I am also surprised one of the two negative factors is investors chasing small cap, highly volatile stocks. not that such a behavior would hurt returns, but that it is done often enough to hurt returns

  3. Michael G says:

    I can see how underdiversification could lead to one portfolio underperforming, but why should the AVERAGE of 10 underdiversified portfolios be worse than one well diversified portfolio?
    (a) underdiversified portfolios all tend to overspecialise in the same direction?
    (b) The MEDIAN underdiversified portfolio performance is well below the AVERAGE underdiversified performance?
    (c) You need to be sufficiently diversified to survive catastrophic loss, in order to be there to happen on the big winners.
    Much more subtle than at first sight

  4. t3rse says:

    So a question then for “Guest Author,” Barry, or any others from the world of the much spited individual investor.

    What’s a little guy like me supposed to do given that:

    1. I don’t have a large enough portfolio to have an account managed by some clever adviser.
    2. I’m not interested in paying a Mutual Fund management fees to be correlated with the market or worse.
    3. I’m striving to learn not just from blogs but from different books and free online classes on finance and portfolio management.
    4. I’m not the guy from the part of town (ok part of the world, to be honest) where it will all be okay and some inheritance or parental bail out will ever kick in.
    5. I’ve got 15 years until kids start going to college and 30 until I can max out my social security retirement benefits.