Study Details Investors’ Mistakes

0 comments — written on November 11th, 2004

Straight from the Wall Street Journal…

“Nearly half of Americans say their biggest investment mistake was to wait too long to start investing, according to a new survey.

Investing too little is another painful mistake that investors tend to make, according to a Merrill Lynch Investment Managers’ Americans and Their Money Mistakes survey.

Meanwhile, more than one-third of Americans say they lost money by holding on to underperformers. Investors also admit to buying “hot” stocks without doing any research or buying an investment without understanding the fees and tax consequences.

About 16% of Americans go for more than 18 months without rebalancing their portfolio while nearly one-third say they allocated too much of their portfolio to one investment or stock.

The study, conducted by National Research LLC, a unit of Mathew Greenwald & Associates in Washington, interviewed 1,000 participants with a household income of $75,000 or more during July and August. The margin of error is plus or minus three percentage points.

Many of the investment mistakes that Americans make can, in part, be attributed to a specific investment profile, the survey notes. Investors who have a more structured way of investing — termed “measured investors” — tend to have difficulty letting go of losing stocks or wait too long to reap gains on winners, notes Bob Doll, chief investment officer of Merrill Lynch Investment Managers.

Among the most common mistakes that “reluctant” or “unprepared” investors make is to wait too long before they start to invest or to underinvest when they do.

Meanwhile, “competitive” investors are especially prone to trying to time the market or chase “hot stocks.”

By JANE J. KIM
Staff Reporter of THE WALL STREET JOURNAL
November 10, 2004

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