Few managers satisfy these dual criteria, but those who do tend to have both good returns and low risk - just the kind of manager that anxious investors are more likely to follow through thick and thin.Įach year for two decades I have compiled a list of investment newsletter editors who meet these dual criteria I call it my Investment Newsletter Honor Roll. So what’s the solution for skittish investors? One option is to only follow managers who have historically produced above-average performance in both up- and down markets. Read: The 7 tough questions you need to ask your financial adviser This doesn’t work for everyone many skittish investors find the attendant volatility too much too take. Lynch instead recommended that investors stick with his fund through thick and thin, which is indeed one way of overcoming these constant whipsaws. This meant they bought at the high and sold at the low, which is a reliable way to lose money. What was evidently happening was that many investors were only buying into the fund after it had rallied, then selling after a correction. equity fund over the trailing two decades, and yet he told those advisers that more than half the investors who’d ever owned the fund had lost money. His fund at that time was the best-performing U.S. The crucial role psychology plays in investment success was brought home to me in a powerful way in the early 1990s after reading something that Peter Lynch, the legendary manager of Fidelity Magellan fund, told a group of financial advisers. Tips for financial freedom from Nobel Prize winners
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