Heed the Words of Investment Gurus to Avoid Investment Mistakes


Heed the words of investment gurus to avoid investment mistakes. Investment words of wisdom may be especially appropriate as we consider current circumstances:  bonds have plunged in value this year and signal the end of a 30 year bull run, US stocks recently have hit new highs, there are troubling overseas developments (Syria, Iran) and we have the prospect of yet another US government shutdown. On the other hand, the variables change but “crises” and “problems” always occur and always (at least temporarily) affect markets.


Here’s some food for thought from 3 great investors to help avoid investment mistakes: 

Sign Up for E-News

1.       Avoid Market Timing – Peter Lynch

2.       Don’t Let Your “Gut Emotions” Steer Investment Decisions – Benjamin Graham

3.       Crises in Markets Come and Go (and Never Disappear) – Shelby M.C. Davis

Avoid Market Timing – Words of Wisdom from Peter Lynch. Peter Lynch rose to fame by successfully managing the Fidelity Magellan Fund (1997-199) and racking up an eye-popping 29% annual rate of return. Sadly, the average investor in his fund during that 13 year period earned a small fraction of 29% by jumping in and out of Lynch's fund to try to enhance returns. Another example: the S&P 500 (1992-2012) registered a nice 8.2% annual return. What kind of return did investors earn if they missed the best 10, 30, 60 or 90 trading days that occurred during this 20 year (approx. 2,500+ trading days) period? Instead of an 8.2% return, investors who missed the best 10 S&P 500 days earned half as much (4.5%); those who missed the best 30 days earned ZERO, those who missed the best 60 days lost 5.3% per year for 20 years and those who missed the best 90 days lost a whopping 9.4% per year for 20 years.  In other words, stay at a party from start to finish – don’t dart in and out if you don’t like the music or find the conversation boring!

Don’t Let Your “Gut Emotions” Steer Investment Decisions – Benjamin Graham. Benjamin Graham is considered the Father of Value Investing – he wrote a number of classic books on security analysis in the 1930s-40s. Graham said “individuals who cannot master their emotions are ill-suited to profit from the investment process.” (if you’re wondering how to avoid the tendency to be governed by emotions, hire an investment advisor with a solid non-market-timing driven approach). Research by Dalbar, Inc. and Lipper (1993-2012) on the average US stock fund return vs. the average investor return sound remarkably similar to the S&P 500 data mentioned above. While the average annual stock fund (1993-2012) returned 8.6% per year, the average stock fund investor return was a measly 4.3% - literally half!  The enemies of calm investing include greed, fear, the tendency to chase the most recent “hot thing” and the tendency to crowd the exit door when something turns sour.

Crises in Markets Come and Go – Shelby M.C. Davis.  Human history is the history of crises and “relative” periods of calm. It’s no surprise that investment markets exhibit the same patterns of exuberance, fear and everything in between.  This is true even if every specific crisis seems to consist of a different combination of variables (be it stagflation or inflation, collapsing or soaring energy prices, collapsing or soaring home prices, etc).  A wise investor acknowledges that crises will come and crises will go, and his or her investment strategy will adjust to changes but avoid drastic over-reactions (crowding the entrance doors to buy or crowding the exit doors to sell).

Projected investment rates of return inevitably are based upon past decades of data (although we always say “the past is no guarantee of future performance…”). Here’s something to think about – the S&P 500 from 1927-2011 had an annual compound rate of return of 9.75%.  Included in this data series is: the Crash of 1929 and the Great Depression, along with subsequent booms and busts. The lessons provided by these 3 investment sages is that your own mistakes may be a bigger source of your own poor investment return than economic and political variables that move markets and are beyond your individual control.






Eve Kaplan is a Fee-Only (no products sold) Certified Financial Planner® Practitioner with 30+ years of investment/planning experience. Kaplan Financial Advisors upholds the highest fiduciary standards in the planning industry.  Eve opened Kaplan Financial Advisors in 2004 to provide comprehensive financial planning and investment management services to single women and couples. Eve can be reached at 908-898-0549 or Eve@KaplanFinancialAdvisors.com.  Visit her website at  www.KaplanFinancialAdvisors.com


Copyright © 2011-2018 by Eve Kaplan

The opinions expressed herein are the writer's alone, and do not reflect the opinions of TAPinto.net or anyone who works for TAPinto.net. TAPinto.net is not responsible for the accuracy of any of the information supplied by the writer.

TAP Into Another Town's News:

You May Also Be Interested In

Sign Up for E-News

Berkeley Heights

TAPinto Spotlight on Business Features New Providence Dentistry

July 17, 2018

NEW PROVIDENCE, NJ - TAPinto "Summer Spotlight on Business" features local businesses and their owners who are important to our communities. Follow this column to receive a fresh perspective on small business owners and their unique needs while shining a spotlight on their stories.

This edition features New Providence Dentistry, operated by Dr. Beth Herko and her staff of ...

Avoiding 10% Tax Penalty

Do you want access to money from your retirement accounts but aren't sure of the real costs involved?

Most retirement accounts have a set age requirement you must reach before making penalty-free income distributions, which is usually 59.5 but can sometimes be as early as age 50. If you decide to access your accounts earlier, you could face penalties ranging from 10%-25%, which is not ...

Beneficiary Forms - As Important as Your Will

As you plan for the future, don’t leave out one of the most overlooked must-do’s: naming the beneficiaries of your retirement assets. Updating your beneficiary forms ensures that the legacy you worked so hard to build will be distributed correctly. Don’t delay -- the designations on your beneficiary forms supersede those stated in your Will. 

Try answering the ...

ReNew Salon and Spa Welcomes Senior Stylist Joan Mormilo

July 17, 2018

GILLETTE, NJ - ReNew Salon and Spa welcomes Senior Stylist Joan Mormilo to their staff. Mormilo brings with her over 20 years of excellent customer service in the salon and spa industry.

She has extensive product knowledge, focuses on keeping up-to-date on industry standards and practices, believes in mentoring young stylists, and is a team player who strives to ...

Complete the Professional Administrative Certification of Excellence (PACE) Program at Union County College in Five Weeks

CRANFORD – Union County College will be offering the American Society of Administrative Professionals PACE Certification (Professional Administrative Certification of Excellence) from Monday, July 23 through August 22. If you are an executive assistant, office manager, paralegal, program analyst, benefits administrator, supervisor or meetings and events planner, this program is for you.

17 Years Running and the Pizza is still Hot!! The Downtown Westfield 5K & Pizza Extravaganza is July 25, 2018

The 17th Annual Downtown Westfield 5K & Pizza Extravaganza, now more often referred to as the ‘Pizza Run’ will be here in no time! Don’t forget to sign up for a night of running, pizza, prizes, and entertainment! The event will be held on July 25, 2018 with a start time of 7 pm. Register online at PracticeHard.com before our Monday July 23, 2018, at 11:59 pm deadline will be ...

Union County’s Free Summer Arts Festival Continues July 18 at Echo Lake Park Featuring 5 Against 1

The Union County Summer Arts Festival concert series continues on Wednesday July 18, with the band 5 Against 1, a Pearl Jam  tribute band, taking the stage at Echo Lake Park in Mountainside.

The free series, presented by the Union County Board of Chosen Freeholders,is held at Echo Lake Park during July and moves to Oak Ridge Park in Clark during August.

5 Against 1, which ...

Geoffrey the Giraffe Moves In To New Brunswick Children's Hospital

July 12, 2018

NEW BRUNSWICK, NJ - Over a stretch of nearly 70 years, Geoffrey the Giraffe at Toys R Us stores was the symbol of happy times for generations of children, and now he may provide those same feelings for children coming to a hospital.

"From this day forward, Geoffrey stands tall in our lobby to encourage our smallest patients to smile when they enter our facilities," said John ...

Upcoming Events

Tue, July 17, 10:00 AM

Healing the Children, new providence

Summit Old Guard

Giving Back

Wed, July 18, 10:30 AM

Berkeley Heights Public Library, Berkeley Heights

Story Time & Craft with DIVA DELORES AND THE ...



Wed, July 18, 1:30 PM

Trailside Nature & Science Center, MountainsidE

Trailside’s Annual Summer Wednesday Matinee ...

Arts & Entertainment Education


Wed, July 18, 6:00 PM

Summit YMCA, Summit

Senior Summer BBQ at the Summit YMCA

Food & Drink

Wed, July 18, 7:30 PM

Chatham United Methodist Church, Chatham

Masterwork’s Summer Sing Four to Feature Brahms

Arts & Entertainment

Special June Episode of 'Berkeley Heights Here & Now' Features 6th Annual Street Fair

BERKELEY HEIGHTS, NJ – The Berkeley Heights Communications Committee (BHCC) today announced a special edition of Berkeley Heights Here & Now is available on the Township website, www.berkeleyheightstwpnj.gov.


The special episode features the 6th Annual Berkeley Heights Street Fair held on June 24 and includes onsite interviews with attending residents/visitors, event ...

Women Have Special Financial Needs That Advisors Overlook

Women have special financial needs that advisors overlook in two ways: 1) advisors don’t always acknowledge the different planning needs women have and 2) advisors don’t always communicate well with female clients – especially if the client comes to a meeting with her husband. It’s very common for a male advisor to spend much or most of the face time in meetings talking to ...

5 Simple Ways to Save Water this Summer

According to the L.A. Times, the average American uses an estimated 98 gallons of water EACH day.  

Here are five simple ways you can save water, to help you conserve water this summer and take some pressure off of your drains.

1. Unless you are using it, turn the faucet off. How many of us still leave the water running while we shave or brush our teeth?According to ...