If there is only one rule you must follow as a retail investor, it is to "buy low and sell high".  Easy eh!  So why can so few investors point to a record of consistent success?  

Dan Richards in a recent Globe and Mail article points out that the root of this investing mystery lies in our emotional reactions to market movements, creating an impulse to buy high and sell low – exactly at the wrong times.  Peter Lynch, a famous and successful fund manager was also puzzled by the extent to which investors who owned his funds had dramatically lower returns than the funds themselves. The reason for this, quite simply, is the typical investor’s inability to stomach the markets ups and downs – buying at the peaks and selling at the troughs.

So here’s the lesson we’ve learned, take some valium and  "buy low, sell high"  easy eh!

For a complete read of the referenced article, see the Globe and Mail (Business Section) of May 25, 2009.

This entry was posted on Wednesday, May 27th, 2009 at 5:42 pm and is filed under Financing Your LifePast50. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.