Why People Lose Money | The Ugly Truth about Investing
 

The returns reported by mutual funds aren’t actually earned by fund investors. EMOTIONS have played havoc with investor returns for the past 20 years.

DALBAR’s update of its Quantitative Analysis of Investor Behavior (QAIB) study found that while the S&P 500 index has returned 8.35% over a 20-year period ending in 2008, the average equity investor earned just 1.87%, which was less than the inflation rate of 2.89%. Bond investors fared no better. They earned returns of just 0.77% compared to 7.43% for the index.

Dalbar is a financial research firm that for 15 years has been analyzing the buy-and-sell decisions of mutual fund investors in the United States.

Repeatedly, the Dalbar study has shown investors sabotage themselves by succumbing to fear and greed.

Modern Portfolio Theory: Dr. Harry Markowitz

More return and less risk, or At Least Get What You are Paying for; The Theory: One of the most important and influential economic theories dealing with finance and investment, MPT was developed by Harry Markowitz and published under the title "Portfolio Selection" in the 1952 Journal of Finance. Dr. Markowitz, along with William F. Sharpe each won the Noble Peace Prize in the 1990's for their work in this seemingly simple concept.

The Efficient Frontier model and the work of Sharpe and Markowitz is the foundation of our investment strategies implemented for our clients.

Inspiring confidence in your investment plan and protected monthly cash flow helps to keep our clients from making the dumb emotional errors other typical investors make, as highlighted above in the Dalbar Study.


This is tougher to accomplish than one might think;
Modern portfolio theory has a positive impact on how investors perceive risk and performance. The theory demonstrates that portfolio diversification can reduce investment risk. But it often requires investors to rethink notions of risk demanding that the investor take on a perceived risky investment (managed futures or commodities, REIT, or Emerging Markets for example) in order to reduce overall risk.

Patience and Planning are the keys to financial success.
We excel in assisting clients in discovering and unlocking all of the resources and assets available to them. By defining a budget, expenses and securing a defined and secure lifetime income stream with the portfolio, we can then confidently invest the portfolio wisely, specifically tailored to the individual client needs.