Quote for the Week
I think the idea of timing or hedging is a very difficult thing for investors to pull off. It is in the nature of the human psyche, we are much more likely—this is a behavioralist kind of argument—to make the wrong choices at the wrong time. We’ve compared returns earned by mutual fund investors—dollar-weighted returns—with returns earned by mutual funds themselves, or time-weighted returns, and the investors seem to lag the funds themselves by almost 3 percent per year. Fund investors put almost no money into equity funds in the late 1980s and early 1990s when stocks were cheap, and then they poured huge amounts of money into equity mutual funds between 1998 and the crash in 2000. Investors also bought the wrong kinds of funds, that is, in the three years leading up to the crash, they put nearly $500 billion into technology funds, telecommunications funds, and a whole new breed of aggressive growth funds we can describe as “new economy” funds. At the same time, they took about $100 billion out of value funds. Then, after the market crashed, they took money out of those aggressive growth funds and put it into value funds. Overall, investors seem to have an innate sense of bad timing. You can actually measure this. – John Bogle (source)
From the Archives
Last Call
- Why Do People Invest in Expensive Stocks? – Klement on Investing
- Preparing the Next Generation for Inheritance – Infinity Financial
- Inflation Matters More Than Poor Returns to Retirees – White Coat Investor
- Equity Investors Could Learn from Art History – J. Emanuel
- The Eternity of Intelligent Investment – Kingswell
- Social Media Noise and Stock Manipulation – L. Swedroe
- Carl Sagan’s 9 Timeless Lessons for Detecting Baloney – Big Think
- The Economics of the Kalshi Prediction Market – CEPR
- The Label Wanted Another ‘California Girls’. The Beach Boys Gave Them a Song that Changed the World – Independent
- 24 Images from the Wildlife Photographer of the Year Contest – Smithsonian