Emotion Drives Investor Decisions
The cardinal rule of investing is to buy low and sell high. However, investors historically have increased their allocations to stocks near the top of the market runs and decreased their allocations to stocks near the bottom of down markets. As you may guess, movements in and out of the market are counterproductive for investors pursuing long-term goals because they end up buying when prices are high and selling when prices are low. Click here to see a chart of how emotion drives investor decisions.