Over the 20-year period from 1993 to 2012, the S&P 500 returned 8.2% annually, while the average stock investor in the U.S. earned only 4.3%.  This great divide between the two results is called the “investor behavior gap” because the majority of it is the result of individual investors making bad decisions.

Fear, greed and other emotions drive negative behaviors such as:

• Dumping money into the latest high-flying fund or asset class with the expectation that the outperformance will continue.
• Actively avoiding areas of the market that are down and out of favor with the mindset the beleaguered investment will never come back.
• Disregarding your investment plan by attempting to time the market.

“Individuals who cannot master their emotions are ill-suited to profit from the investment process.” — Benjamin Graham (“Father of Value Investing”)