We have been through the worst market upset in modern times, and
the evidence shows that stock and exchange traded fund (
) investors just aren't learning. Recent research has shown that
many are still relying on bad habits and emotions to navigate the
is used as a proxy for investors to calculate real-life returns by
comparing investors' earnings to the average investment.
The New York Times
if you had put money into an S&P 500 index fund 20 years ago
and just left it there - no buying, no selling, just investing and
forgetting about it - you would have earned (minus fees) about 8%.
Is Successful Investing Luck or Strategy?
But is that how people are investing? Not so much.
It's hard to just let your money sit there. Media headlines, our
own emotions and financial wizards more often dictate our actions.
The good news is that it's what people have been doing for decades
or centuries, even.
Here are a few things you can do to dump the bad behavior:
Admit and own your mistakes. Did you get caught up in the tech
bubble in 1999? Real estate in 2006? Did you sell in 2002, late
2007 or early 2008? Looking at past bad decisions will help the
Make a List:
Then go through that checklist before you make major investment
decisions. It will help you avoid mistakes in investment
Have Your Strategy:
This is so important. Before you ever buy, you should know when
you will buy and when you will sell. Don't leave it to the fates
to decide. An easy strategy we use is trend following, using the
200-day moving average. [
What a Moving Average Can Tell You.
If things aren't going your way, it's okay to take a break and
sit on the sidelines. But don't do it too long; you could risk
missing out on the next potential long-term uptrend. [
How to Navigate a Trendless Market.
Look at the Good
: Investing doesn't have to be all about self-flagellation.
You've made some smart moves, too. Celebrate them. Remember what
you did right and try to replicate that again and again until it
For more stories about trend following, visit our
trend following category.
Tisha Guerrero contributed to this article.