How does the “Average Investor” stack up?

Investment Insights by Mike Jones


Mike JonesLast week I received the 4th quarter edition of J. P. Morgan Asset Management’s Guide to the Markets.

The guide is most certainly a publication for the professional as it is page after page of data pertaining to the investor and financial markets covering details like standard deviation, the VIX, Correlation, P/Es Yield Spreads, Return and Valuation Dispersions… you get the picture.

This quarter’s issue contains 68 pages of charts, graphs and tables… and I love it!

One slide in particular caught my attention and caused me to study and analyze it for a while.  See below:

So what we have are twenty years of asset class returns (20 years that went by entirely too fast, I’d say!). Just a few tips: “60/40” (the column in blue) means a portfolio that is balanced between stocks and bonds (footnoted above).  EAFE is an index that measures the return of stocks in Europe, Asia, and the Far East.

But I want you to zero in on “average investor” (in orange).

Dalbar, which follows the investment choices of mutual fund investors and has done so since 1994, has this to say about the average investor:

Since 1994, DALBAR’s QAIB has been measuring the effects of investor decisions to buy, sell and switch into and out of mutual funds over both short- and long-term time frames. The results consistently show that the average investor earns less – in many cases, much less – than mutual fund performance reports would suggest.

Is there a lesson to learn here? I definitely think so!

Here’s my advice: do what you must to employ discipline in your investment process, which may include one or more of the following tasks:

Get a financial plan
Adopt an asset allocation program
Hire an advisor
Systematically dollar cost average
Let your investments work for you and your family
Do NOT sabotage your plan/process


Argent Financial Group

Celebrating its 30th anniversary in 2020, Argent Financial Group (Argent) is a leading, independent, fiduciary wealth management firm. Responsible for more than $30 billion in client assets, Argent provides individuals, families, businesses and institutions with a broad range of wealth management services, including trust and estate administration, investment management, ESOPs, retirement plan consulting, funeral and cemetery trusts, charitable organization administration, oil and gas (mineral) management and other unique financial services. Headquartered in Ruston, Louisiana, Argent was formed in 1990 and traces its roots back to 1930.

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