MFOHome About Commentary Discussions Funds The Best Resources Support Us!

Howdy, Stranger!

It looks like you're new here. If you want to get involved, click one of these buttons!

Sign In Register

Categories

In this Discussion

Here's a statement of the obvious: The opinions expressed here are those of the participants, not those of the Mutual Fund Observer. We cannot vouch for the accuracy or appropriateness of any of it, though we do encourage civility and good humor.

    Support MFO

  • Donate through PayPal

An Investor’s Edge

MJG
in Fund Discussions
Hi Guys,

The bulk of the formal investment research finds that the small individual investor doesn’t match-up well with the institutional players, and more often than not we fail to capture anything close to market rewards. Many private investor behavioral shortcomings are frequently offered to explain this poor performance. The overarching conclusion is that the odds favor the big guys.

But there is one significant advantage that permits us to turn those odds more to our likings. We get to pick our trading timeframe. Motley Fool writer Morgan Housel emphasized that fact in a recent presentation.

If you want access to the viewgraph material of his entire talk, here is the Link:

http://www.fool.com/investing/general/2014/06/10/presentation-slides-youre-trying-too-hard.aspx?source=iaasitlnk0000003

Specifically, I direct your attention to viewgraph 9 in the presentation. That graph summarizes how the likelihood of positive outcomes increases with time. That’ll be nothing new to the MFO crew. Within that graphic, Housel highlights the typical operating range of Wall Street and contrasts it to the range accessible to the common investor. I loved that comparison.

By being patient, and shifting our focus to the longer term, we improve our odds of positive outcomes from the low 60% range in the short-term, to the 70% range in the mid-term, to above 80% for the true long-term market participant.

Enjoy Housel’s presentation material. Good luck to all.

Best Regards.

Comments

  • CrashCrash
    Should I admit this? Since I began investing in '03, I've always been fully invested. It's hard to tell exactly how well I've done because of big chunks falling into my lap all at once, in different traunches. (Inheritances.) I rode out the '08-'09 Crash, too. In fact, during the crash, I kept adding to my 403b. That is all rolled-over in an IRA, now. And I'm old enough now to take some of it out without penalty, but I'm holding out, letting it CONTINUE to grow. Bless my wife. She works like a government mule.
  • JohnChisum
    Congrats Crash. Investing when others are fleeing might sound Buffettish but that is exactly what one needs to do. When the markets turn around those shares you bought at sale prices show the success of your strategy.

    Thanks MJG for the topic.
Sign In or Register to comment.