Retail investors often get swept up in market hype, as we saw in the dot-com bubble and cryptocurrency craze
have dominated news headlines and sparked a rush among investors hoping to cash in on the next big thing. But as the flow of money into these stocks continues to surge, it’s worth asking: Are investors, especially DIY investors, chasing the hype and getting ahead of themselves?that “tech giants are set to spend over US$1-trillion on AI in the coming years, with little to show for it so far.
DIY investors can easily fall into the trap of overestimating their abilities. They may believe that access to information equips them to make savvy trades. However, as Prof. Statman’s findings highlight, many end up switching between funds – especially in high-risk, high-reward sectors such as tech – and significantly underperform. For instance, those who jumped between technology funds lost 13 percentage points a year compared with buy-and-hold investors.
Good professional advisers manage clients’ biases and emotions, becoming behavioural coaches rather than stock pickers, helping investors stick to a plan. They can provide a buffer between investors and the psychological traps that can derail their financial goals.found that, over the decade ending Dec. 31, 2023, the average investor lagged the average fund by 1.1 per cent a year, missing out on about 15 per cent of the total returns as a result of poor timing of buying and selling.
Cent Investors Investor Approach Robinhood Excitement Study Stocks Daron Acemoglu Nvidia Corp. Morningstar
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