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Investors are Their Own Worst Enemy

When market conditions generate extreme levels of optimism or pessimism, behavioral market timing mistakes are amplified. Investor confidence tends to rise after stocks do well, reinforcing the behavior to buy stocks when they are expensive. Similar behavioral forces work in the other direction. Investors are averse to experience losses and have a tendency to sell stocks soon after they decline in value and are actually cheap.

An extreme behavior in selling stocks when they are cheap occurred in the credit crisis of 2008. $147 Billion of assets were pulled out of U.S. stock mutual funds that year. The subsequent recovery yielded a cumulative return of 45.6% spanning the 2 year period of December 2008 to December 2010. A $1MM portfolio would have missed out on an investment return of $456,000.

Behavioral counseling is an advisor’s way to help clients avoid these types of emotional investment decisions. By simply ending this cycle of mistiming the market through destructive behavioral mistakes, investors can achieve superior results leading to a more fulfilling quality of life into and throughout retirement.

Important Disclosure Information

Please remember that different types of investments involve varying degrees of risk, including the loss of money invested. Past performance may not be indicative of future results. Therefore, it should not be assumed that future performance of any specific investment or investment strategy, including the investments or investment strategies recommended or undertaken by RegentAtlantic Capital, LLC (“RegentAtlantic”) will be profitable. Please remember to contact RegentAtlantic if there are any changes in your personal or financial situation or investment objectives for the purpose of reviewing our previous recommendations and services, or if you wish to impose, add, or modify any reasonable restrictions to our investment management services. A copy of our current written disclosure statement discussing our advisory services and fees is available for your review upon request. This discussion is not a substitute for personalized advice from RegentAtlantic. This information is current only as of the date on which it was sent. The statements and opinions expressed are, however, subject to change without notice based on market and other conditions and may differ from opinions expressed in other businesses and activities of RegentAtlantic. Descriptions of RegentAtlantic’s process and strategies are based on general practice and we may make exceptions in specific cases.

Important disclosure information

Please remember that different types of investments involve varying degrees of risk, including the loss of money invested. Past performance may not be indicative of future results. Therefore, it should not be assumed that future performance of any specific investment or investment strategy, including the investments or investment strategies recommended or undertaken by RegentAtlantic Capital, LLC (“RegentAtlantic”) will be profitable.

Please remember to contact RegentAtlantic if there are any changes in your personal or financial situation or investment objectives for the purpose of reviewing our previous recommendations and services, or if you wish to impose, add, or modify any reasonable restrictions to our investment management services. A copy of our current written disclosure statement discussing our advisory services and fees is available for your review upon request.

This article is not a substitute for personalized advice from RegentAtlantic. This article is current only as of the date on which it was sent. The statements and opinions expressed are, however, subject to change without notice based on market and other conditions and may differ from opinions expressed in other businesses and activities of RegentAtlantic. Descriptions of RegentAtlantic’s process and strategies are based on general practice and we may make exceptions in specific cases.

RegentAtlantic does not provide legal or tax advice. Please consult with a legal and or tax professional of your choosing prior to implementing any of the strategies discussed in this article.

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