Shockingly, the average investor lost to the market. It happens most years, yet the financial media acts like it’s Truman defeating Dewey every time.
Looking at the data from Openfolio, a platform for individual investors, their average investor was up about 5% on the year. That’s around 7% worse than the S&P 500 Index. On a million dollar portfolio, that’s a difference of making $50,000 versus $70,000 for the year. And the people with $70,000 would have had fewer headaches about what the market was doing.
And that’s just for individual investors. The professionals came up short, too, in all four areas the article examines (US Stock Funds, US Sector Funds, Target Date Funds, and International Stock Funds). I’ve said it before and I’ll say it again: active management just adds noise and expense to your investments.
All of this just goes to show that trying to beat the market is a fool’s errand. Active management is, over the long term, a negative sum game. The only way to win is to stay out of the game.
McLean Asset Management Corporation (MAMC) is a SEC registered investment adviser. The content of this publication reflects the views of McLean Asset Management Corporation (MAMC) and sources deemed by MAMC to be reliable. There are many different interpretations of investment statistics and many different ideas about how to best use them. Past performance is not indicative of future performance. The information provided is for educational purposes only and does not constitute an offer to sell or a solicitation of an offer to buy or sell securities. There are no warranties, expressed or implied, as to accuracy, completeness, or results obtained from any information on this presentation. Indexes are not available for direct investment. All investments involve risk.
The information throughout this presentation, whether stock quotes, charts, articles, or any other statements regarding market or other financial information, is obtained from sources which we, and our suppliers believe to be reliable, but we do not warrant or guarantee the timeliness or accuracy of this information. Neither our information providers nor we shall be liable for any errors or inaccuracies, regardless of cause, or the lack of timeliness of, or for any delay or interruption in the transmission there of to the user. MAMC only transacts business in states where it is properly registered, or excluded or exempted from registration requirements. It does not provide tax, legal, or accounting advice. The information contained in this presentation does not take into account your particular investment objectives, financial situation, or needs, and you should, in considering this material, discuss your individual circumstances with professionals in those areas before making any decisions.