Thank you to all those that took my investor survey. I promoted this survey on LinkedIn, Twitter and through my blog subscribers. I received 62 responses that I could use. Those that responded spent between 20 seconds and several minutes to complete, primarily dependent on whether they answered the open ended questions and the thought put into those questions. This was not scientific, but was certainly interesting…especially the 2nd question.
1. 95% of respondents agreed that investors’ worst enemies are themselves.
2. 56% of respondents said the biggest culprit of causing investors to be their own worst enemy was our emotions. 32% blamed the media. 8% said it was our impatience. 3% said expert forecasts. And perhaps most interestingly, none of the respondents (not one) said market volatility was the biggest culprit. But if you really think about it, volatility drives everything else. Meaning that our emotions are hectic because of volatility…we tend to get emotional upon experiencing volatility. And the media screams the loudest during periods of volatility. We get impatient when things don’t go our way (typically during periods of downward volatility). So while no one attributed the biggest factor to volatility, the truth is that it is the trigger for many of the causes of investor error.
3. There were many different responses to the BEST piece of financial advice I gave or received. However, there were a lot of similarities and themes among responses. The most frequent responses were: Strategy, Discipline, Stay the Course, Long-term, Patience, Diversification. The general theme here is that the best advice is to have an investment plan and to stick with it for the long term, despite what others are saying/predicting or how you are feeling at the moment.
4. The WORST piece of advice investors gave or received included: Time the Market, Buy/Sell This Now, This Time is Different, Trust Conviction, Invest With The Experts. The theme of bad advice is to take a short view of things, follow your intuition and forget your plan.
None of this information should be surprising. Similar to dieting, we all know what we should do. Knowing and doing are completely different animals. It is natural to not want to lose money, but that is very unnatural in financial markets. If you are an investor, there will be periods of losses – sometimes extreme. Understanding that may help you stay the course rather than try to outsmart the market or predict what will happen. Having a plan you believe in and engaging someone that will hold you accountable to that plan can be very helpful, and protect all of us from ourselves.