This chart is the reason I keep my principles written down and review them every month. The “behaviour gap” is the difference between what an investment actually returns and what the average investor walks away with.
The investment doesn’t lose them money – their behaviour does. They pile in when prices are high and everyone is euphoric, then panic and sell when the market turns and fear takes over.
They do the exact opposite of “be fearful when others are greedy and greedy when others are fearful.”
As I wrote in my principles, the market is a voting machine in the short term and a weighing machine in the long run, so the people who get caught up in short-term noise are the ones who pay the price.
The hardest part of investing was never picking the asset; it was sitting on my hands and doing nothing while my emotions screamed at me to act. Wealth is built slowly through compounding and patience, and the surest way to destroy it is to let fear and greed make your decisions for you. This gap is what happens when you ignore the advice.
TheBucket 