Here’s Why and What To Do About It
It’s a shocking statistic — approximately 90% of retail investors lose money in the stock market over the long run. With the rise of commission-free trading apps like Robinhood, more people than ever are trying their hand at stock picking. Unfortunately, the vast majority are learning the hard way that investing is harder than it looks.
In this article, we’ll uncover the sobering data on retail investor performance. We’ll analyze the main reasons most stock pickers fail to generate consistent profits. And we’ll share research-backed tips on how you can beat the odds and join the elite group of successful investors.
Here’s a preview of what you’ll learn:
- Staggering data reveals 90% of retail investors underperform the broader market
- Lack of patience and undisciplined trading behaviors cause most losses
- Insufficient market knowledge and overconfidence lead to costly mistakes
- Tips from famous investors on how to achieve long-term success
Read on to get the full story! This in-depth guide will illuminate why investing trips up most amateurs. And you’ll learn how to avoid critical errors that drain portfolio returns.
Numerous studies demonstrate that retail investors as a group significantly underperform the market over multi-year periods. For example, a 2012 study by Barclays Bank found that over a five-year period, the average retail investor earned annual returns of just 2.3%, compared to 7.3% for the S&P 500 index.
A Vanguard report came to a similar conclusion. Looking at data from 2001 to 2016, Vanguard determined that the average retail investor gained a yearly return of just 4.3%. The S&P 500 returned 7.7% per year over the same period.
A frequently cited report by market research firm Dalbar calculated that from 1995 to 2015, the average equity mutual fund investor earned just 5.2% annually versus 9.9% for the S&P 500. After adjusting for inflation, most investors actually…
