3 Signs you are Gambling and Speculating with your Investments

Investing in Stocks can seem very speculative and dangerous to people that don’t understand how it works.  If you have an investment coach that helps you to invest in a globally diversified portfolio, then you have avoided the 3 big mistakes in investing.   The 3 signs you are gambling and speculating with your investments are stock picking, market timing, and track record investing.  I will go over the detriment of each one briefly.

1. Stock Picking

Stock Picking is when you, or your advisor, think that you know exactly which company stocks are going to go up, and which ones are going to go down.  You think you know who the next Google is going to be.  First of all, let me tell you why this is not possible.

There are so many bullies on Wall Street and investors throughout the world that are buying and selling stocks each day for different reasons.  There is no way for you to predict the way every investor will feel about a company stock.  There are also random events and economic news that can effect individual stocks in a big way.  Unless you have a crystal ball and can predict the future, you cannot pick winning stocks continuously.

Now let me tell you why stock picking is so detrimental to your portfolio.  Every time you buy and sell a stock, there is a cost associated with that.  Also, if you are stock picking, you are most definitely not diversified, and are increasing your risk astronomically.

2. Market Timing

According to Investopedia, market timing is “The act of attempting to predict the future direction of the market, typically through the use of technical indicators or economic data. ” 1.

If you have ever watched any of the financial channels on TV, or been on a financial website like Yahoo Finance, they are constantly promoting Market Timing.   Every day I check Yahoo Finance there is some new trend that somebody has predicted in the market.  One day they say, this bull market is just getting started.   Then the next day they say, indicators say that market is in for a huge downturn.   Which one should we believe, or would our retirement portfolio be better off if we just avoided the market timers opinion?

Market timing has shown to be a huge detriment to your investments.  In a study done by Dalbar, the average investor over the last 30 years has gotten beat by the S&P 500 by over 7% per year.  The reason for that is because these investors got in when the market was doing well, and got out when the market was going down.

To better explain why market timing can kill your portfolio performance check out this chart explaining the growth of wealth for the last 20 years, if you stayed invested vs if you timed the market. 2.

market timing

You can see from the chart that if you stayed invested for the last 20 years, your money would have grown close to 5x.  If you pulled your money out for even 5 of the best days during that time, your return would be about $15,000 less according to this depiction.  And then if you look all the way to the right, if you missed the 30 best days, you lose any return at all.

3. Track Record Investing

Track record investing is thinking that because a mutual fund manager was able to beat the market in the past, he will be able to do it again in the future.   If you are looking for a mutual fund, doesn’t it seem right to find one that has beaten the market for the past few years?  That is why this form of speculation can be the hardest to avoid.

Studies show that mutual funds that have done well in the past, are very likely to under perform in the future.  Track record investing is basically just believing that a mutual fund manager can beat the market through methods such as stock picking and market timing.  If you believe in one, you are lured into the other 3 big mistakes.

If you can avoid doing these 3 things, you have taken out a big portion of the risks involved in stock investments.  The key is to stay disciplined and work with an investment coach that educates you and gives you peace of mind.

By Jimmy Hancock



1.”Market Timing Definition | Investopedia.” Investopedia. Investopedia US, n.d. Web. 16 June 2014. <http://www.investopedia.com/terms/m/markettiming.asp>.

2. Matson Money. Separating Myths From Truths, The Story of Investing. N.p.: n.p., n.d. PPT.


3 Rules of Investing

Investing can be very complicated and confusing, but it also can be very simple.  Today I am going to try to simplify investing by discussing the 3 most important parts of putting together an investment portfolio.

1. Own Equities

Equities is just another word for stocks.  Why is this the first and most important rule?  Stocks have historically out performed fixed income over the long term, and that is including the few crashes we have had.  In fact, that battle is not even close, especially now that fixed income has stayed so low the past few years.  Check out this chart which compares the annual return from 1926-2013 of the S&P 500 (Stocks) with Treasury Bills (Fixed Income).

stocks vs bonds







It is obvious to see the long term advantage of owning stocks in your retirement portfolio.


2. Diversify

Diversification in your investment portfolio is measured in part by the number of stocks you are invested in, as well as the different categories and countries those stocks are located in.   For example, if you invest in the S&P 500 Index, you are investing in 500 very large US companies.  You are not really diversified at all if that is all you own in your portfolio.

There are many different categories of stocks to invest in.  There is Micro cap (very small companies), Small Cap, Value, Growth, International.  Our company specifically invests our clients in over 12,000 stocks in all of those categories throughout the world.

The benefit of diversification is to lessen the risk that any one stock or group of stocks will crash, go bankrupt etc.   The standard deviation (volatility) of your portfolio can also be managed through proper diversification.

3. Rebalance

Rebalancing at a simple level is just buying low and selling high.  If your portfolio is 50% in Stocks and 50% in fixed, rebalancing would keep it that way through many different market swings.  If stocks go up faster than fixed, then you need to sell stocks (high) and buy fixed (low), and the other way around if the opposite happens.

Rebalancing most importantly keeps your portfolio at the risk preference that you choose, and especially helps to reduce risk in down markets.   It can also give your return a slight boost over the long term as well.


Now that you know the 3 rules of investing, you need an investment coach that understands and implements these rules as well.  If you can keep these 3 rules then your retirement portfolio will be in good shape over the long run.

By Jimmy Hancock



Matson Money. The Market Factor. Digital image. Matsonmoney.com. N.p., 23 July 2014. Web. 4 Nov. 2014. <https://www.matsonmoney.com/>.

Millennials and Their Money: 3 Tips for Overcoming Investing Fears

millennialWhen it comes to Millennials and their money, most Americans ages 18 to 29 would rather sit on a boat load of cash. They have a sinking feeling that investing in the stock market is like boarding the Titanic. According to a recent Bankrate.com study cited by a recent The Street article, younger people prefer cash. Of course, cash is a low-yielding investment that’s better reserved for retirees who just want don’t want any risk. How does a young person get over his or her aversion to the stock market?

  1. Investing instead of trading

One way a young investor can get over their fear of losing money in the stock market is by taking a long-term approach. Trading stocks is not the same as investing in the market. Most of the horror stories of people who lost fortunes occurred because they “bet” money on a penny stock instead of “dollar cost averaging” into a particular stock position. Smart investors contribute a certain amount of money on a regular basis so that they build up shares in diversified mutual funds over time.

  1. Not worrying about an immediate reward

A lot of younger people are used to experience immediate gratification because of our highly technical world and consumer-driven society. But investing in stocks can be frustrating in the short term if the market is not climbing at that particular time.  Focus on the long term not the immediate reward.

  1. Diversifying from the start

When trying to figure out how to invest their money, some young people are lost. Their default option is a savings account or possibly certificate of deposits. Other investments include bonds, real estate, commodities, futures, options, precious metals such as gold and private businesses. These should not be your default option and can be risky and or give you very low returns long term.  One way to have a diversified portfolio is by choosing a mutual fund that already includes a variety of different stocks in different sectors and countries and also short term bonds. You can hold highly diversified mutual funds within a 401(k), Roth IRA or many other retirement or regular investment accounts.

Sitting on cash is the equivalent of putting gold under the mattress or burying it in your backyard. Millennials are too smart not to find better ways to invest their money.


By Financial Social Media and Jimmy Hancock

Hidden Costs in Investing

costThere are many different ways in which costs are charged to your investment portfolio.   Many of these are hidden and are basically untraceable.  Today we are going to discuss a few of the hidden costs, and a few of the transparent costs.

Costs you should know about

Management Fee/Commission

Whoever your investment advisor is is making a percentage of their money from your portfolio.  This is necessary, but you need to make sure that the fee or commission you are being charged is not over the top.  If your working through an advisor that works on Commissions, then he legally cannot charge you more than 8.5% as a shave off the top of any new money coming in.  That is a big percentage.  Commissions are also dangerous because it makes the advisor more focused on the sale and initial transfer then he is on helping you ongoing.  He gets almost all his money upfront.  A management fee is a percentage charged each year as a much smaller percentage than commissions.   If your manager is trying to actively trade, he will usually charge a higher fee.  You will usually be charged just commissions or just a fee, not both.  

Mutual Fund Loads

A lot of mutual funds come with loads.  These are basically additional costs to you that are basically penalties.  They can be for different reasons, but many times it is to keep you from switching out of the fund.  They charge you if you move your money out before a certain time frame.  Not all mutual charge a load, so make sure your funds do not have a load.

Hidden Costs

Trading Cost

One of the main hidden costs comes from the Bid Ask Spread.  The Bid Ask Spread is the difference between the buy price and sell price of a stock.  The guy on Wall Street who actually performs the trade gets paid the difference.  There is a cost to you every single time a stock is bought or sold by a fund.  If your mutual fund is being actively traded by a manager trying to beat the market, then more likely than not they are losing you money on the way.   If you are invested in index type funds, aka passively managed funds, then the trading cost you pay is minimal.

Expense Ratio

The expense ratio is how the mutual fund company pays for their operational costs.  Operating expenses are taken out of a mutual fund’s assets and in turn lower the return to the fund’s investors.   This is another cost that comes to you in the form of a lower return.  The actual amount that it is costing you is very hard to quantify.   You want to invest in funds with very low expense ratios.

There are a few other costs involved as well, but are only for specific accounts and situations.  These costs are not necessarily a bad thing as long as they are kept low, and reasonable.  Even with these costs investing in stocks is the greatest wealth creation tool on the planet.  To limit you costs you need to avoid actively traded funds and managers, and invest in a diversified efficient portfolio.  

By Jimmy Hancock


1.Bold, Adam. “4 Hidden Costs in Investing – US News.” US News RSS. US News and World Report, 8 Feb. 2011. Web. 22 Sept. 2014. <http://money.usnews.com/money/blogs/the-smarter-mutual-fund-investor/2011/02/08/4-hidden-costs-in-investing>.

2.”Expense Ratio Definition | Investopedia.” Investopedia. Investopedia US, n.d. Web. 24 Sept. 2014. <http://www.investopedia.com/terms/e/expenseratio.asp>.


Why Should you Rebalance your Portfolio?

Today we are going to discuss the topic of Rebalancing your portfolio and why it is so important.  I will explain to you how a continuously rebalanced portfolio is one that is constantly buying low and selling high.  

 “Rebalancing -The process of realigning the weightings of one’s portfolio of assets. Rebalancing involves periodically buying or selling assets in your portfolio to maintain your original desired level of asset allocation.”

Say What?

Rebalancing can be very complex and confusing, but I will give a simple example to explain some of the benefits.

For example, lets say you have a retirement portfolio with $50,000 invested in stocks, and $50,000 invested in bonds and money market accounts, aka fixed.  This is the 50/50 portfolio which is pretty safe and best for those closer to retirement.  So you let it go 1 year and lets say it was like 2013 stocks had a great year.   After 1 year you now have $65,000 in stocks and $51,000 in the fixed portion.  You are no longer invested like you wanted to be, and are opening yourself up to way more risk than you originally planned on.   Rebalancing is then needed to sell off what is high, which stocks, and buy into what is low, fixed.  There is never a time when rebalancing forces you to buy high, or sell low.

Rebalancing never seems like the right thing to do at the time.  For example in 2008 when stocks were plummeting, rebalancing would have been selling safety to buy stocks.  If you think about it though, you are buying low and selling high.  During these times you need an investment coach to keep you off the ledge.

So by rebalancing a portfolio, what you are really doing is lowering the risk and keeping to your individual risk preferences.  That is really the main goal of rebalancing, but an added benefit is being able to consistently buy low and sell high.  This can help over the long term to increase your return as well.  Take a look at this chart by Forbes which visually explains all of this.


Rebalancing chart forbes


You can see from the chart that rebalancing really does its work when the downturns in the market come.  The chart shows that the rebalanced portfolio made more than the portfolio that was left alone, and with much lower risk.

Make sure that your portfolio is being rebalanced at least annually by your advisor.

By Jimmy Hancock


1.”Rebalancing Definition | Investopedia.” Investopedia. Investopedia US, n.d. Web. 17 Sept. 2014. <http://www.investopedia.com/terms/r/rebalancing.asp>.

2. Brown, Janet. The Impact of Rebalancing. Digital image. Forbes.com. Forbes, 16 Nov. 2011. Web. 17 Sept. 2014. <http://www.forbes.com/sites/investor/2011/11/16/does-portfolio-rebalancing-work/>.

Is it Safe?

danger thin icePerhaps one of the biggest challenges that investors face is determining if “right now” is a SAFE time to invest (meaning not just the present, but any time). What makes it difficult for investors is a twofold issue: first, is a lack of historical knowledge and perspective, and second, their own emotions. Actually, if one looks back on an historical basis, it would have appeared that there was no safe period in which to invest. Investors are really funny in this regard (actually most advisors are really no better). In 2009 investors were in shell shock coming out of the 2008 financial debacle. By 2012 it was really too good and couldn’t last. Last year the market had been going up for four years and that was just too good to be true and something had to come crashing down soon. And this year, with all the election year rhetoric and world events swirling around us, the stock market now appears to be getting more volatile…? What investors are looking for is something that does not exist—ever—a “Goldilocks” market!

I’m going to take some historical facts and figures to provide some historical context that may enable my clients to feel more comfortable when faced with the ongoing question of I “is it safe.”
The first issue that investors must confront is that there is no such thing as a “safe” investment and this applies whether funds are invested in equities, bonds, government fixed income, gold, real estate, your mattress or in a coffee can in the back yard. Your money is always subject to one form of risk or another. For a more complete discussion on this subject read Main Street Money by Mark Matson. If you don’t have a copy let me know and I will get you one.
In this blog, I’ll confine myself to discussing equities and fixed income contained within a diversified portfolio that is periodically rebalanced, with dividends and capital gains reinvested, because that is what we do with our client’s money. Let’s take a decade by decade look at all the challenges investors have faced.

• 1917-23 Russian Civil War
• 1922 Mussolini takes control of Italy (eliminates private ownership, total government control!! Hmm!)
• 1923 Hyperinflation in Germany
• 1926+27 Chinese Civil War
• 1929 Wall Street Crash
• 1929-39 Great Depression
A horrible period to be invested in the market—manic market followed by the 1929 crash. Yet a fully diversified portfolio had $100,000 growing to $135,000 at the end of the decade.

• 1932-33 Holodomor Starvation
• 1933 The Nazi Party come into power
• 1933-45 The Jewish Holocaust
• 1935 US Presidential Candidate Assassinated (Huey Long)
• 1935-1936 Italian/Abyssinian War
• 1936-38 Stalin Purges (including Gulag Death Camps)
• 1936-39 Spanish Civil War
• 1937 The Hindenburg Airship Explodes
• 1939-45 World War II
Talk about a horrific period to begin investing? Probably the worst ten year period, economically we have ever experienced. Yet, $100,000 invested at the beginning of the decade grew to $152,000.

• 1933-45 The Jewish Holocaust continued
• 1939-45 World War II continued
• 1945 President Roosevelt dies before the war ends
• 1945 Eastern Europe is dominated by Communist USSR
• 1949-1993 The Cold War
What could be a worse time to begin investing as Word War II was starting, followed by the beginning of the Cold War. Let me interject an investment factoid here. The renown international investor, Sir John Templeton made his initial reputation by borrowing $10,000 and buying 100 shares of every stock on the New Your Stock Exchange selling for less than $1 at the start of the war.
If you had controlled your anxiety, like Sir John, and invested $100,000 at the start of the decade, you would have been amply rewarded by seeing that investment grow to $336,000!

• 1949-93 The Cold War continues
• 1950-53 The Korean War
• 1951 Mao Zedong takes power in China
• 1956 Suez Canal Crisis
• 1956 Russian quashing of the Hungarian Revolution
• 1959 The Cuban Revolution
• 1959-75 The Vietnam War
This was supposedly the boring decade under President Eisenhower. However, international events didn’t take a holiday and they continued to swirl about us creating many excuses for avoiding the assumption of any investment risk.
Nevertheless, investors who ignored events and invested $100,000 at the start of the decade had $393,000 in their portfolios at the end of the decade.

• 1949-93 The Cold War continues
• 1959-75 The Vietnam War continues
• 1961 The Berlin Wall built
• 1962 The Cuban Missile Crisis
• 1963 JFK Assassinated
• 1964 China explodes its first nuclear bomb
• 1967 Six Day Israeli/Egypt War
• 1968 MLK and RFK assassinated—rioting in major cities
• 1969 Libyan Revolution—Khaddafi comes to power
This was the decade where we got to watch both national and international occurrences in almost “real time” thanks to the expansion of television and global communications. An event filled decade both home and abroad. Plenty of excused could be found as to why it was not safe to invest. Yet again, $100,000 invested at the start of the decade produced a portfolio worth $259,000 by the end of the decade.

• 1949-93 The Cold War continues
• 1959-75 The Vietnam War continues
• 1970 The beginning of Terrorism in the world
• 1972 Kidnap and murder of Israeli Athletes at Olympics Games
• 1972 President Nixon resigns
• 1975-79 Khmer Rued in Cambodia (Genocide)
• 1979 Saddam Hussein comes to power
• 1979-1981 Iranian kidnapping of U.S. Embassy and diplomats
This decade begins with Vietnam, followed by the Nixon resignation, then the Iranian Embassy kidnapping, and ends with President Carter’s “malaise.” Gas lines, international problems, national embarrassment and a Russian bear looking more ominous.
Yet somehow if one was courageous enough to invest $100,000 at the beginning of the decade, it would have grown to $271,000.

I could go on with the history lesson, but suffice it to say that the 80’s decade rewarded $100,000 by growing to $453,000. In the 90’s it grew to$338,000.
This last decade, which was sort of known as the “lost decade” because of the dot.com/tech bubble, the real estate bubble. This resulted in two severe bear markets. Still investors were rewarded by having their portfolio vastly outperform the underlying cost of living and inflation.
So the lesson for all is that if one pays attention to events, you can always find a reason why it is not a good time to invest—and historically, you would have always been wrong!! I will not say anything about the world we find ourselves in today because we have always found ourselves in difficult times both domestically and globally—there have always been challenges and there always will—it is just the nature of the species.
As to the basic question: Is it safe? I’ll let you draw your own conclusions!

By Jim Hancock

The blog came from two sources: Matson Money Investor Coaching Series—“But this Time it Really is Different” and Fred Taylor—Matson Coach, Atlanta, GA
Source of returns figures for the various asset classes utilized in the hypothetical portfolio: DFA Returns Software 2.0, Feb. 2011. Past performance is no guarantee of future results. Performance included reinvestment of all dividend and capital gains.

Second Quarter Market Returns

market dataThere have actually been complaints in the media and news about how “boring” the stock market has been so far this year.  Boring is bad in sports, but in the stock market it is usually a good thing.  There has been slow but steady growth in every single sector and sub sector of the market year to date.   Matson Money sends quarterly reports to all of our clients and to us.  This is what they have to say about the market after quarter Two.

Quarterly Report: Matson Money

“From stocks to bonds, and developed markets to emerging markets, world financial markets have rallied in unison during the first half of 2014.  The Dow Jones Industrial Average was up over 1.5%, its fourth-straight first half-year rise.  In addition, the MSCI World Index of developed-world equities rose 6.52% and the MSCI Emerging Markets Index was also up 6.32% in the first six months of 2014.  The rallies reflect continued market resilience amid world political and economic unrest.

Following last year’s stellar returns and decent first six-months this year, many undisciplined investors may be swaying in their investment strategy.  A couple of years of gains or losses often turn investors, who have planned on a thirty-year investment time horizon, into investors with only a one or two year time horizon.  When investors see losses, they want out; when they see gains, they want in.  Investors’ tendency to extrapolate recent trends in stock prices is well documented.  There are several different studies over the last few years which provide a good amount of evidence that investors’ risk tolerance increases when equity markets are high (when investors should be rebalancing and shifting money out of equities).  And that individuals are most risk averse when equity markets are low (when investors should be buying more equities).  A 2007 study done by Geoffrey Friesen and Travis Sapp found that investors lose on average 1.56% annually in return, because they tend to pull money out of equity mutual funds following a market decline when it is more favorable to buy more equities (buy low).  Conversely investors increase equity allocations following market increases when you should rebalance out of equities (Sell high).” 1

They go on to list the some of the returns of other sectors of the market.

S&P 500 Index- 7.14%

MSCI World Index (Excluding US) – 5.76%

Index: Barclays Cap. U.S Govt./Credit – 2.25%    1.


As you can see, the stock market is in a peaceful positive state as of right now.  We know it will not always be that way.  We don’t and can’t know when the next big drop in the market is, but we can stay disciplined now and when that time does come.   Stay diversified, rebalanced, and focused on the long term and you will make it through any crash.

by Jimmy Hancock



1. Matson Money. “Account Statement.” Letter to James Hancock. 1 Apr. 2014. MS. N.p.

What is a Hedge Fund?

investment guruAre you missing out on the supposedly huge amount of profits to be made by investing with a “Guru” in his Hedge Fund?

Hedge funds are like mutual funds, but they are managed by self titled experts who charge an enormous fee to try and beat the market.  Hedge funds and Investing Guru’s are built on the premise that a smarter guy with a faster computer can make miracles possible by uncovering inefficiencies in the market or predicting the future.  They are attractive to so called sophistocated investor who wouldn’t be caught dead investing in “boring” index funds.

Do Hedge Funds Beat the Market?

“According to a report by Goldman Sachs released in May, hedge fund performance lagged the Standard & Poor’s 500-stock index by approximately 10 percentage points this year, although most fund managers still charged enormous fees in exchange for access to their brilliance. As of the end of June, hedge funds had gained just 1.4 percent for 2013 and have fallen behind the MSCI All Country World Index for five of the past seven years, according to data compiled by Bloomberg. This comes as the SEC passed a rule that will allow hedge funds to advertise to the public for the first time in 80 years.” 1

Studies continue to come in showing real data of the horrible returns of hedge funds vs. the whole market.

“Harken back to a decade ago. Your broker recommends an investment in a hedge fund. Your registered investment adviser disagrees. She recommends you invest in an index fund composed of 60 percent stocks and 40 percent bonds. You go with the broker’s recommendation. You don’t want “average” returns. You want your money managed by the best minds in finance.

Fast forward to today. According to a Harvard Business Review blog, a composite index of more than 2,000 hedge funds returned 72 percent over the past decade. The index fund, which took significantly less risk, had a return of about 100 percent, while charging much lower fees.

You would think these dismal returns would have dealt a crippling blow to the hedge fund industry. Not so. Hedge funds remain the darling of many pension plans. According to the same blog, hedge funds that go long and short on stocks and invest in equity derivatives managed a mere $865 billion a decade ago. Having demonstrated their lack of investment skill, these fund managers now manage more than $2.4 trillion. Go figure.” 2


Hedge funds are flashy and somehow popular, but if you want long term growth in your retirement accounts you should stay as far away from them as possible.   Instead, invest in a diversified portfolio,  and find an investment coach who will educate you especially in down markets.

by Jimmy Hancock


1. Kolhatkar, Sheelah. “Hedge Funds Are for Suckers.” Bloomberg Business Week. Bloomberg, 11 July 2013. Web. 14 July 2014. <http://www.businessweek.com/articles/2013-07-11/why-hedge-funds-glory-days-may-be-gone-for-good>

2. Solin, Dan. “The Fleecing of Investors Continues.” The Huffington Post. TheHuffingtonPost.com, 17 June 2014. Web. 17 July 2014. <http://www.huffingtonpost.com/dan-solin/the-fleecing-of-investors_1_b_5487788.html>.

Market Timing: The Myth

Bear MarketSo what is market timing and are you losing returns because your money manager is doing it?  Or even worse, have you been caught doing it all on your own.

According to Investopedia, market timing is “The act of attempting to predict the future direction of the market, typically through the use of technical indicators or economic data. ” 1.

If you have ever watched any of the financial channels on TV, or been on a financial website like Yahoo Finance, they are constantly promoting Market Timing.   Every day I check Yahoo Finance there is some new trend that somebody has predicted in the market.  One day they say, this bull market is just getting started.   Then the next day they say, indicators say that market is in for a huge downturn.   Which one should we believe, or would our retirement portfolio be better off if we just avoided the market timers opinion?

Academics and Research

Listen to what Investopedia has to say further about market timing…

“Some investors, especially academics, believe it is impossible to time the market. Other investors, notably active traders, believe strongly in market timing. Thus, whether market timing is possible is really a matter of opinion. ” 1. 

I am going to go with the academics on this one.   I have the data to prove that market timing does not work.

CATEGORY 1984-2013 Annualized Return
S&P 500 Index 11.10%
Dalbar Average Investor – Equity Fund 3.69%
CPI (representing Inflation) 2.80%


As we see here in this little chart, if an investor would have just been invested in the S&P 500 for the last 30 years they would have gotten over an 11% return.   But what did the average equity investor get?   3.69%.  That is just over inflation.


So why did the average equity investor lose over 7% annual growth in their portfolio?  A part of that is due to costs, but the vast majority is because of market timing.  Investors seem to almost always be wrong when it comes to deciding when to be in the market and when to take their money out.

Lets take 2008-2009 as an example.   The end of 2008 the market is taking a nose dive and what does everyone tell you to do.  Get out of the market.  So you take your money out because of the fear that it will never come back.  Ultimately you are selling low.  Then on March 9, 2009 the bottom finally hits and the market begins to take huge jumps upwards.  But you are not invested so you get none of that growth.  When you decided to get back in you were buying high.  The market today is reaching new highs and is way past where it was before the crash in 2008.

The most simple thing to say in investing is buy low and sell high.  Obviously it is not that simple to actually do.  Market timing is detrimental to your long term retirement goals.

– By Jimmy Hancock


1.”Market Timing Definition | Investopedia.” Investopedia. Investopedia US, n.d. Web. 16 June 2014. <http://www.investopedia.com/terms/m/markettiming.asp>.

2. Matson Money. Separating Myths From Truths, The Story of Investing. N.p.: n.p., n.d. PPT.