The way to make money in investments is simple, right? Buy low, sell high. Seems like such a straightforward concept.

If this is true then why do so many investors do the exact opposite? It’s been said that stocks seem to be about the only thing in the world people don’t want to buy when they’re on sale. A powerful example of this is found by evaluating the performance of the stock market versus that of the “average investor.” According to a Dalbar Inc. study, over the last 20 years (1998-2017) the S&P 500 stock index had an average annual return of 7.2 percent. By contrast, the average investor generated a meager 2.6 percent average annual return. To put some numbers around that, a $10,000 investment in the S&P 500 index would’ve been worth $40,169 in 20 years whereas the average investor’s $10,000 would have only grown to $16,709.