INVESTORS ARE THEIR OWN WORST ENEMIES

• Everyone knows that you should buy low and sell high—and yet, all too
often, we buy high and sell low.
• Everyone knows that beating the market is nearly impossible—but just about
everyone thinks he can do it.
• Everyone knows that panic selling is a bad idea—but a company that
announces it earned 23 cents per share instead of 24 cents per share can lose $5
billion of market value in a minute-and-a-half.
• Everyone knows that Wall Street strategists can’t predict what the market is
about to do—but investors still hang on every word from the financial pundits
who prognosticate on TV.
• Everyone knows that chasing hot stocks or mutual funds is a sure way to get
burned—yet millions of investors flock back to the flame every year. Many do
so though they swore, just a year or two before, never to get burned again.
…our brains often drive us to do things that make no logical sense—but make
perfect emotional sense.