This simple graph, produced by BlackRock, shows mutual fund money flows (blue bars) vs. the return of the S&P 500 (US Market).
The graph demonstrates how investors pull money out of the market when stocks are low and buy into the market when the stock market is high. Investors do the opposite of buy low and sell high. It is no wonder the average investor underperforms the market. Investors act on fear and not rational analysis.
Ideally inflows would have been up in 2002 and 2009/2010.
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