All you Do-It-Yourself’ers out there…this one’s for you. Painting your bathroom yourself, changing a flat tire on your car – these are good things to do yourself and not “farm out” to someone else. Managing your own investments, studies say not usually a good idea. And, as I discovered this week, bowhunting elk in CO in unfamiliar and difficult terrain—don’t do that yourself either!
A little unknown fact about me; I began bowhunting exactly 8 years ago this week. I remember this because I delivered my second child one week to the day after my first successful bowhunt. With 8 years of bowhunting under my belt, one would think that was a pretty good foundation for this week’s elk hunt in San Juan County, CO. NOPE. Not even close. Check out the terrain…YES, there are elk down in there!
This only makes me think of how much time one needs to invest on their own so they can lay a proper foundation for navigating difficult terrain – a.k.a. difficult markets? Research shows that investor “bad behavior” a.k.a. emotional investing with poor results is more often the case than not. DALBAR releases a yearly study called The Quantitative Analysis of Investor Behavior (QAIB) that compiles flow data of dollars into mutual funds. They have found that the average investor underperforms the market by a mile – 4.32% per year in stocks and 5.56% per year in bonds!
I love Mebane Faber’s take on the subject.
While stalking elk my intuition told me to climb high, and yet the elk were below me (a-hem, kinda like buying high and selling low…not good ideas). The next day, I decided to learn from my prior mistake and went in low, and alas, the elk were above me. Sound familiar with your investing technique? Hunting, it seems for me, is counter-intuitive and doesn’t always have a roadmap. Many investors over the years have shared the idea of investing being very counterintuitive, and indeed, it is. Add to that the “economy disconnect” facts of the market doing better when economic news is worse and vice versa, and you have yourself an “investing elk hunt” of sorts.
Markets heat up, investors jump in, markets sell off, investors bail out. Bad Behavior.
What is good behavior? Good behavior is governed by rules–the experience, and the outcome is always much better. Disciplined rules-based investing will get you where you need to be. Hopefully the same concept will fill my freezer this winter with some Colorado elk! I wonder how bad the stats are for East coasters bagging an elk in Colorado with a professional at their side? Not good–to be sure!
So, whether bowhunting or investing your hard earned dollars, just say NO to DIY’ing it and find a trusted professional who can guide you to where you want to be.