Category: Behavioral Finance

5.03% That figure is the difference between the annualized return of the U.S. stock market versus the average return of all investors in United States stock mutual funds, over a twenty year period ending in December 2009. The number comes from an annual study conducted by financial research firm Dalbar. The study found that while U.S. stocks returned 8.20 percent… [more]  

Traditional economics assumes that investors are rational and make logical decisions. This has spawned a number of financial theories including Modern Portfolio Theory (MPT) and the Efficient Market Hypothesis (EMH). To this day, many investment advisors and individuals use these theories as the basis of their investment strategy. But as we intuitively understand, human beings are in fact not always... [more]