I got this from Market Index and might be of interest to some...

I got this from Market Index and might be of interest to some AGY holders:

Investors play a difficult game and the vast majority of us underperform the market. 

According to JPMorgan, the average investor returned an annualised 3.6% between 2002 to 2021, well below the S&P 500’s 9.5%.


We’ll recap some of the most common mistakes investors make.


#1 Trying to time the market: It’s a coinflip trying to time the market. Did you know that 8 of the 10 worst performing days for the S&P 500 happened within 1 week of the 10 best performing days?


#2 Making decisions based on news: There are three certainties in life: Death, Taxes and using CNBC’s ‘Markets in Turmoil’ series as a buy signal. The show has appeared almost 100 times since 2010 and the average return one year later is 40% with a win rate of 100%.


#3 Circle of competence: Invest in what you understand (aka your safety zone). How often have we suddenly delved into something completely random only to regret doing so – ‘I’m going to become a day trader’, ‘I’m going to become a microcap resource expert’ … the list goes on.


#4 Trading too much: As the saying goes, investors make money for themselves, while traders make money for their brokers.


#5 Worrying too much: There’s always a million things to worry about – Yield curve inversion, re-acceleration in inflation, China’s real estate collapse, an AI bubble etc. The best investors play their game, remain optimistic and focus on the long term.


#6 Ignoring fundamentals: As Buffett says, “in the short run, the market is a voting machine, but in the long run, it is a weighing machine.” At the end of the day, companies are tied down to fundamentals – A healthy balance sheet, sustainable earnings, high margins and plenty of growth levers.


#7 Emotional decision-making: ‘Buy low, sell high’ often turns into ‘Buy high, sell low’ when you put emotions into the mix. The periods of great euphoria often coincide with the point of maximum risk. And when you want to hang up the gloves – Is often the point of maximum opportunity. As an investor, it’s important to stay as rational as possible.


#8 Over-analysing: Peter Lynch famously said if you spend more than 13 minutes analysing economic and market forecasts, you’ve wasted 10 minutes.

Personal Verdict: Guilty!!