Dalbar

Dalbar recently released their 2009 edition of their Quantitative Analysis of Investor Behavior (QAIB).  (You can access an extract here.) 

As usual, the news is not pretty.  Investors managed equity returns of 1.87% over the last 20 years, while the S&P 500 returned 8.35%.  In other words, investors lagged the market by almost 6.5% annually.  In fact, investor returns in equities were lower than inflation.

Dalbar’s conclusion–under the heading Bad Decisions Lead to Poor Results (!)– is that when the going gets tough, investors panic.  This is the fifteenth year that they have put out their QAIB, so they’ve got a pretty good idea they’re right on this point.  I would have to agree with them, since everyone in the industry sees the same pattern in their account flows.

But perhaps there is more to it.  It’s easy to imagine investors getting panicked out of the stock market.  It’s quite volatile at times and can have some hair-raising declines.  Fixed income, on the other hand, is generally thought of as a very staid investment, something appropriate for the old and stuffy, like the classic t-shirt with the Monopoly guy that reads “Gentlemen Prefer Bonds.”  Fixed income is presumed to be something that you buy and hold for the income stream, not something that is actively traded.  Yet, surprisingly, fixed income investors do no better on a relative basis.  Their return over the last 20 years was just 0.77%, again about 6.5% annually worse than the Barclays Aggregate Bond Index, which came in at 7.43%.

One unfortunate commonality between stock fund and bond fund investors was their average holding period:  way, way too short.  Equity investors held for an average of 3.11 years, while fixed income investors held for 2.69 years.  The average business cycle is longer than that!  Think about it–the only “expertise” an equity investor had to have to earn 8.35% over the past 20 years was patience.  The investor didn’t have to do anything clever or perform any market analysis.  The returns were there if you were simply willing to be a slug and not do anything!  If you are wiggling in your seat every time you invest, perhaps you have RDD–Return Deficit Disorder.

Active investment management attempts to improve upon market returns, and there are several proven methods for achieving those excess returns.  But none of them are going to be very successful until the investor can sit still through at least a couple of market cycles.   Do your due diligence thoroughly, choose carefully, and then sit tight and let the process work.

60 Responses to Dalbar

  1. [...] like to use the DALBAR numbers to drive home the point that retail investors fail to time the market correctly.   The most [...]

  2. [...] Institutions do it poorly (see background post here ), and retail investors do it horribly (see article on DALBAR  ).  Why is it so [...]

  3. [...] We’ve talked about this type of behavior before. [...]

  4. [...] Age Of No More Tears Investing,” Forbes, 8/17/10).  Surely, this time will turn out better than all the the times the masses have felt so strongly about a given investment [...]

  5. [...] Age Of No More Tears Investing,” Forbes, 8/17/10).  Surely, this time will turn out better than all the other times the masses have felt so strongly about a given investment [...]

  6. [...] that you can do to defuse their anxiety and to reduce the behavior penalty on their returns is likely to be as profitable as any investments you can make in their [...]

  7. [...] 4. Persist.  Markets are going to be uncomfortable at times.  You’ve got to stick with a strategy through thick and thin to reap the best returns.  It’s most important not to abandon a sound strategy when it is really uncomfortable–that’s what causes investors to perform poorly.  [...]

  8. [...] to buy on dips.  By doing so, you are essentially doing the opposite of most retail investors, as measured by DALBAR, for [...]

  9. [...] Anleger in Aktien-und Rentenfonds performen langfristig 6,5% p.a. schlechter als jeweilige Index: Dalbar Dalbar recently released their 2009 edition of their Quantitative Analysis of Investor Behavior [...]

  10. [...] Institutions do it poorly (see background post here ), and retail investors do it horribly (see article on DALBAR  ).  Why is it so [...]

  11. click here says:

    My spouse and I stumbled over here coming from a different page and thought I might check things out.
    I like what I see so i am just following you.
    Look forward to going over your web page for a second
    time.

  12. Hey there! This post could not be written any better!
    Reading through this post reminds me of my previous room mate!
    He always kept chatting about this. I will forward this page to him.
    Pretty sure he will have a good read. Thank you for sharing!

  13. this site says:

    Greetings! Very helpful advice in this particular article!
    It is the little changes that will make the biggest changes.
    Many thanks for sharing!

  14. this site says:

    I loved as much as you will receive carried out right here.
    The sketch is tasteful, your authored subject matter stylish.

    nonetheless, you command get bought an impatience over that you
    wish be delivering the following. unwell unquestionably come
    more formerly again since exactly the same nearly a lot often inside case you shield this hike.

  15. Hi, i read your blog from time to time and i own a similar one
    and i was just curious if you get a lot of spam remarks?
    If so how do you stop it, any plugin or anything you can
    suggest? I get so much lately it’s driving
    me mad so any help is very much appreciated.

  16. this site says:

    That is very interesting, You are a very skilled blogger. I have joined your feed and look forward to
    looking for extra of your fantastic post. Additionally, I’ve shared your site in my social networks

  17. Louie says:

    I just like the helpful info you provide in your articles.

    I’ll bookmark your weblog and test again here regularly.
    I’m relatively certain I’ll be informed many new stuff right right here!
    Good luck for the following!

  18. Simply desire to say your article is as surprising.
    The clarity on your put up is simply nice and i can think you’re a
    professional on this subject. Well together with your permission allow me to clutch your feed to stay updated with coming
    near near post. Thank you 1,000,000 and please
    keep up the rewarding work.

    My webpage extreme weight loss tv shows

  19. vegan diet says:

    vegan diet

    Dalbar • Systematic Relative Strength • Dorsey Wright Money Management Systematic Relative Strength

  20. Aleisha says:

    Hello friends, how is everything, annd what you want to say concerning this piece of writing,in my view its truly amazing for me.

  21. Kristie says:

    I like the helpful info you provide in your articles. I will bookmark your blog
    and check again here regularly. I am quite sure I will learn lots
    of new stuff right here! Good luck for the next!

  22. Getting lost on the planning takes place. Funeral home owner Daren Sternad,
    of Pocola, OK to George & Lucy Richard thales Urchison. Walter Lawrence Urchison, 88, of Arlington as well as other unusual accommodations — is the last day of loss, it is a
    chemical derived from grain. Such as this one, it can bring great comfort to
    friends and church family was gathered at a location hundreds of thousands of opinions or advice.

    Feel free to surf to my blog … http://www.whitepages.com/people/Katy~Landscaping-Irrigation/Katy-TX/e0u0j3c

  23. Elisha says:

    Experienced plumbers will have to do a remodel of a consumers lot of things
    that must occur in the early detection of DNA sequences,
    and are susceptible to rot. This will give you and your contractor and home buyers had contracted only with reputable service
    providers can provide additional turning lights and signals to the
    repair job or any industry.

    my weblog; site (Elisha)

  24. Lakesha says:

    Paragraph writing is also a excitement, if you be acquainted with after that
    you can write if not it is complex to write.

  25. google says:

    s more, Google Play has exceeded its twentieth million download.
    I have written many articles in different ITcertification as well as he has a vast experience
    in IT industry. This information increases conversions from your potential customers.

  26. Dominick says:

    To get the views of people apply for a set work schedule
    and I knew this because the most preferred contractor to build a small permanent staff and the Illinois Pollution Control Board.
    Would any references be willing to offer an Atlanta roof replacement.

    My web site; homepage (Dominick)

  27. Hello there, just became alert to your blog through
    Google, and found that it’s truly informative.
    I’m gonna watch out for brussels. I’ll be grateful if you continue this in future.
    Lots of people will be benefited from your writing. Cheers!

  28. Buy My House says:

    Hello my family member! I want to say that this post is awesome,
    great written and come with approximately
    all vital infos. I would like to peer extra posts like this .

  29. Evangeline says:

    Attractive section of content. I just stumbled upon your weblog and in accession capital to assert that
    I get in fact enjoyed account your blog posts.
    Any way I will be subscribing on your feeds and even I success you get entry to persistently quickly.

  30. Hey I know this is off topic but I was wondering if you knew
    of any widgets I could add to my blog that automatically tweet my newest twitter updates.
    I’ve been looking for a plug-in like this for quite some time and was hoping maybe you would have some
    experience with something like this. Please let me know
    if you run into anything. I truly enjoy reading your blog and I look forward to your new
    updates.

    My web-site hungry shark evolution hack [hungrysharkevolutionhack1.wordpress.com]

  31. Thank you for every other informative site. Where
    else may just I am getting that type of information written in such an ideal approach?
    I have a venture that I’m just now running on, and I’ve been on the look out for such info.

  32. Hello! I simply wish to ofer you a big thumbs
    up for the great info you’ve got rigght hefe oon this post.

    I am coming back to your web site for more soon.

  33. IR night vision The door bell phone support IR night vision. Again the IC 555 runs in the astable mode, creating flashing pulses at frequencies
    set by R1 and C1. Although the wireless doorbell is not perfect, many people
    have found it to be exactly what they are looking for
    in terms of performance quality and functionality.

  34. I’m very pleased to uncover this great site. I need to too thank
    yyou for your time due to this wonderful read!! I definitely
    enjoyed every part of it and i also have you bookmarked to check out new stuff on your
    website.

  35. Juliana says:

    Can yyou tell us more about this? I’d love tto find out some additional information.

  36. Maggie says:

    Do by yourself as well as your sanity a favor: commit in a very tape measure in case you really don’t by now have a person. Another downside to digital scales is that they naturally run on batteries, meaning that eventually the
    batteries will die and need replacing. Another problem
    with referring to charts that offer average weight ranges is that many people strive to attain the lowest weight
    within in the range.

  37. Download The Simpsons Tapped Out Cheat.
    The Simpsons Tapped Out Cheat is the best generator for Donut and Coins.

    Now you don`t have worry about your account thanks to special anti-ban system.
    Download now and have a fun.

    my weblog … simpsons tapped out cheats and hints

  38. short hair says:

    Juust desire to say your article is as amazing. The clearness in your post is just great and i
    can assume you are an expert on this subject. Fine with your permission let me to grab your ferd to keep up to date
    with forthcoming post. Thanks a million and
    please kkeep uup the rewarding work.

  39. Milagros says:

    About us!being store up is an internet virtual playground for youngsters which honoring furthermore the outdoors,
    including is the results of an marching creative collaboration separating good succeed Interactive also
    nationwide Geographic league. Our aim is to offer a enjoyable, thrilling,
    also protected surroundings for teenagers becoming play online, whereas inspiring conservatives over
    discover moreover protect the natural everyone outside their doorways.

    pet save up is free from outside promoting including adheres
    through a strictprivacy coverage .The province
    concerning aa is ever-changing. we try to ensure had been continuously partaking gamers in fun also enriching game play,
    while taming authority about their position in conserving the globe.
    via players spanning the orb, we include them to the basics like socialization,
    teamwork, originality, furthermore global consciousness.
    is never towardlerated, and on-line safety is frequently taught through
    players and parents same.excited by partnering by means of us or learning more about why thousands
    and thousands of kids select aa as their online playground?
    send a response to us atmarketing@plantkeep.com .
    go to us on: fb Instagram chip YouTube Pinterest Google+

  40. If you opt to use a synthetic oil, the interval at which you need to get your
    oil changed jumps from every 3,000 miles to every 5,000 – 7,500 miles.
    This allows your engine to run at its maximum capacity and help extend the life of the engine.
    As a possible example, if you’re using stiff card stock or a stiff business card
    (which you really should be) simply set the card across the top of a cup or mug of
    some sort.

  41. If you’re pounding away on it during your workout routine,
    or if kids are scrambling across the surface as they run around their jungle
    gym, you can be sure that you or the children will wear out long
    before the floor does. Ralph realizes the hunters have let the fire go out.

    One weekend she did us the “favor” of throwing out
    a potted Amaryllis bulb; I rescued it just in time from the rubbish, but not before we argued as to
    whether there was anything actually growing in that pot of bone dry dirt under the
    pantry cabinets.

  42. If you’re hanging pictures that aren’t a “set” and are different dimensions, then here are some
    further tips:. This will help eliminate the unconscious snacking that is
    so much a part of being overweight. Health and fitness are more
    important for most of us than the beauty standards that society imposes upon us.

  43. Do by yourself as well as your sanity a favor:
    commit in a very tape measure in case you really don’t by now have a person. DON’T PANIC
    if you start to feel yourself getting a little heavier.
    Another problem with referring to charts that offer
    average weight ranges is that many people strive to attain the lowest weight within in the range.

  44. I’ve found ways to make due with what’s available in hotel rooms and city parks, and plenty of
    new ways to add more resistance in my exercises. But just as one day, as
    we suddenly realize that we weigh pounds more than we want to, we may realize that a stumble or
    uneven pavement causes a fall that we would have avoided in the
    past. You realize that your life has changed in many ways because of it.

  45. You might even look forward to those door-to-door solicitors with the Swann
    MP3 DJ Doorbell ($49. The power unit will simply plug into a standard wall socket and
    no further installation will be needed. Also, for those who already have
    a wireless doorbell, you can even purchase add ons
    that provide more chimes or sounds.

  46. This entails plumbing work, fixing electrical fittings, and providing
    various accessories for maximum pleasure and comfort.
    The problem is, more often than not, most people have read about, searched and
    even pondered on what they think or believe happiness is… It
    appears that many of us have pretty much accepted to some
    extent “What happiness is. Health and fitness are more important for most
    of us than the beauty standards that society imposes upon us.

  47. The Tanita brand may be leading the market for several years now concerning
    producing scales that produce very accurate
    results. These bed scales allow recording the weights of
    the patient with least effort and discomfort. These scales have proven themselves to be accurate and easy to read and use, making them a convenient
    choice whenever you need to measure weight.

  48. If you’re pounding away on it during your workout routine, or
    if kids are scrambling across the surface as they run around
    their jungle gym, you can be sure that you or the
    children will wear out long before the floor does. These watches will influence the
    behavior of an individual. This also eliminates tasting foods for those who cook.

  49. Adalberto says:

    You can add an SD card to expand the capacity up to
    32GB card to hold 10,000 songs, though I can’t image anyone
    who would have that many visitors to get through a playlist like that.
    Find free printable pumpkin carving stencils and patterns online
    for Halloween 2010 here. The expense of the wifi doorbell furthermore is dependent upon the particular certain characteristic with all the wi-fi doorbell
    since it really is different coming from 1 entrance bell
    about the distinct additional.

  50. If you are planning an expansion to your property its simple that you need
    to acquire and then install additional security sensors in order to protect an extended section of your own house.
    This USB kit is good for people who need to monitor what’s going on in their office at home or at work.
    Make sure your kids know the rules about what to do when the doorbell rings.

  51. Steve says:

    If you are planning an expansion to your property its simple that you need to acquire and then install additional security sensors in order
    to protect an extended section of your own house.
    Door – Bot is an interesting concept from BOT
    Home Automation. In addition, you get a Walkie Talkie that can be used
    for effective supervision of the house or business property.

  52. I’m really enjoying the theme/design of your blog. Do you ever run into any browser compatibility problems?
    A handful of my blog readers have complained about my blog not working correctly in Explorer but looks
    great in Chrome. Do you have any ideas to help fix this problem?

  53. Hello There. I found your blog using msn. This is an extremely well written article.
    I will make sure to bookmark it and come back to read more of your useful information. Thajks foor tthe post.
    I will certainly comeback.

    Feeel free to surf to my web site … Refused Entry to United States

  54. Kendall says:

    I always uwed to stufy article in news papers but now as I am a
    user of internet thus from now I am using net
    for content, thanks to web.

  55. Theresa says:

    I’ve been exploring for a bit for any high-quality
    articles or weblog posts iin this kind of house . Exploring in Yahoo I at last stumbled upon this web site.
    Studying this information So i am happy to show that I have
    an incredibly excellent uncanny feeling I discovered just what I needed.

    Iso much undoubtedly will make sure to don?t disregard tthis site and provides it a glance regularly.

  56. door bells says:

    A Westinghouse module that features five channels can be found for under $60 and includes one intercom unit.

    This is the pet bed that holds a garment belonging to the owner, preventing the pet
    from feeling separation anxiety when left alone. Here are
    a few suggestions for unique, odd and just plain kooky gifts for those
    hard to shop for pets and pet lovers on your list.

  57. Sherrie says:

    As a matter of fact, there are sensors which are essentially used for overload alerts.
    Lower yourself down to the point where you feel comfortable, then raise yourself back up to the starting position. This leaves the consumer woefully uninformed and relegated to doing in home testing in real world situations.

  58. karate says:

    What’s up, everything is going nicely here and ofcourse every one is
    sharing facts, that’s truly excellent, keep up writing.

  59. If you’re pounding away on it during your workout routine, or if kids are scrambling across
    the surface as they run around their jungle gym, you can be sure that you
    or the children will wear out long before the floor does.
    These watches will influence the behavior of an individual.

    What is more miserable than having a supposed friend tell you
    how fat you are.

  60. Hi there, this weekend is pleasant designed for me, as
    this time i am reading this great informative post here at my residence.

Leave a Reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>