[The Market is Up-So What?]
I read in the 4/28/2011 edition of the Wall Street Journal that inflows to equity mutual funds have been up for the last 13 weeks. Money is coming out of money market funds and municipal bonds among other places. I am not surprised. The S&P 500 is up over 8% year to date according the webpage of Standard & Poors. Although you cannot invest directly in the index, it is a measurement that investors’ watch.
I would not be surprised to find that the investors who are returning to the market are the same folks who jumped out in 2008 and early 2009. It really is sad to watch the destructive behavior of the average investor.
Dalbar just released its Qualified Analysis of Investor Behavior (QAIB) for the 20 years ending 2010 and the results are as disappointing as any other of their findings that they have made since they began this report in 1976 and updated each year for the previous 20 years. Here are the results of Dalbar’s latest findings;
Average S&P 500 return 9.14%
Average Equity Investor Earned 3.83%
Average holding Period 3.27 Years
Here is the bottom line-investor behavior costs the investor lots of money!!! For the 20 years ending 12/31/2011, it cost them a negative return of 5.29%. A loss of $280,377 on an investment of $100,000 over those 20 years.
So far the S&P is up for 2011. Will it stay up? I don’t know. I do know that the next 100% movement of the market will be up. Don’t know when. I do know that if you are not in the market, you will not capture that upside.
Want to know how you can achieve market returns? Call me!!
Past performance is no guarantee of future results.
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Bill Mullen CFP, MBA
Investor Coach
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