In most endeavors, knowledge is power, but in investing it can be a handicap. In investing, if you know nothing about the stock market and you do not follow or read the financial news, your investments have probably done reasonably well. However, if you tried to be a little bit smarter and acted on what you read or heard from investment pundits, you have probably done less well.
I remember reading a story about the long-term performance of accounts at Fidelity Investments. The best performing accounts as it turns out were those that people had completely forgotten about. Take that.
Evidence tends to show that the more effort investors put into improving returns, the worse performance they have. This fact is apparent in the statistics where the average investor earns a return that is less than one-third of what they would have earned if they knew nothing and blindly invested in the stock market.
The market is full of driven and intelligent people trying to outguess each other in the short term.
Don’t play that game. Be comfortable in your investment approach, set out an appropriate financial plan and properly allocate your portfolio to various asset classes.
This alone will differentiate you from the crowd and help you achieve your long-term goals.