Human beings are hard-wired to run with the herd. For millions of years, when the herd stampeded, the smartest move wasn’t the hang around and wait to see why. It was to run. And that’s how they act on the stock market as well. But when it comes to investing, it’s a bad idea. Your feelings are a bad guide. And there is no safety in numbers.I am frequently surprised at how many people still give in to their instincts in these matters. During the housing boom, anything I wrote questioning house prices automatically drew scathing reactions. Today anything I write that is positive about buying a home draws a similar response. (I’ll confess this alone makes me feel bullish.)
Everybody knows the last decade on Wall Street was a poor one for investors.Turns out it was even worse than we thought. A remarkable new study from TrimTabs Investment Research shows that regular investors needlessly lost billions more than they should have on the stock market. Why? It’s the old story: They invested more money in their equity mutual funds during the booms … and then sold them during the panics.
By Brett Arends, Sept. 29, 2010 WSJ
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