Wednesday, April 19, 2017

Investing mistakes in a few graphs

Forecasting business is hard
Don't always trust the experts, stay nimble and open minded or stick to a robust back-tested process
GDP and monetary policy forecasters get it wrong more than not

Investing is a long term game, stay invested and...

Miss the 10 best days and returns falter

...diversified
Miss the 10 best stocks and your returns suffer an average of 4%
Source AQR

The average investor is poor at timing markets




Green line shows index weighted by investors inflows/outflows, clearly average investors tactical moves hurt them
Risk Management matters

Watch your drawdowns (DD) and ask for Returns/MaxDD stats when you invest with a fund.
Have a clear risk management system, it is really hard to come back from a nasty drawdown



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