Anyone can equal the market. Few do. Why is that? Part 3

On Thursday, March 11, we responded to a member’s comment, which stated as follows: “If everything is as easy as you suggest, there would be a great many wealthy people around.”

We discussed how Wall Street banks resort to market manipulation, insider trading, misleading information about securities, the omission of important information about securities, stealing customers’ funds or securities and other crimes, many of which go undetected.  All reduce investor returns.

Yesterday, Friday, March 12,  we talked about the role of Wall Street fees in reducing investor returns.

Important as Wall Street crimes and fees are in reducing investment performance, investor behaviour is another central element. Many investors need no help from Wall Street to do badly.

These are many aspects of costly investor behaviours. Today, we will review two which stand out.

One involves panic buying resulting in buying high. This is herd behaviour based on the fear of missing out, acronym FOMO. When markets revert to that mean, as they always do, investors who bought high, take a beating.

The dot-com bubble of 1999 is a great example, as is the US housing bubble of 2007.

At the opposite end is panic selling. Another example of herd behavior, panic selling results in huge losses.

The Wall Street crash of 1929 and the financial crisis of 2007-2008 are noteworthy examples. 

Benjamin Graham once said, “To achieve satisfactory investment results is easier than most people realize.”

Graham is Warren Buffett’s mentor.

Here is how Monday Morning members and other knowledgeable investors benefit from market highs and from market lows, both of which are predictable.