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Financial Freedom

Can’t Beat the Markets? Here’s Your Problem…

It’s one of the greatest problems current generations face. And when we’re talking strictly about money, I argue it is our greatest problem.

Because it will lead countless investors to a life of mediocrity.

We’ve all heard it. Most folks have said it. “All I need to do is keep up with the markets and I’ll be set.”

It’s the mantra of most financial advice. Earn the market’s average return of something just north of 8% each year and you’ll eventually retire comfortably.

It’s true and accurate logic. Too bad it’s hogwash.

Most folks come nowhere near that critical benchmark.

We’ve recently become obsessed with a small but telling piece of research from Richard Bernstein Advisors. It proves that the average investor has earned nothing close to the stock market’s average return over the last generation.

In fact, he’s barely kept pace with the worst-performing asset classes.

It’s a sad tale…

20 Year Annualized Returns chart

This graph measures the average investor’s annual return over the last two decades versus a wide variety of asset classes.

The fact is, the typical investor earned less than 3% annually over the last two decades – not even a third of what we can historically expect the S&P 500 to return.

A return like that will lead to nothing but mediocrity.

What’s the solution?

We argue the solution is behavioral… not structural. In other words, there’s no real barrier keeping you or any investor from earning a larger return. The problem, instead, is our own behavior.

Most folks don’t understand risk and reward. They don’t understand buying or selling psychology. And they certainly don’t understand some of the quiet currents that stir the markets (like the manipulation of interest rates).

The solution, therefore, is twofold.

First, you must be wise enough to identify shortcomings. And second, you must adopt a strategy that overcomes those shortcomings.

Again, mediocrity is a curse. It’s the result of our biological tendency to follow the herd. We are most comfortable doing what everybody else is doing… no matter the rationale or the result.

To become a successful investor, you must understand that curse. And you must overcome it.

If you want to get rich, you must think and invest differently.

Good investing,

Andrew


About

Andy did what most of us can only dream of. He left our bustling society to rough it in the Alaskan wilderness – no roads, no electricity, nothing but the outdoors and his sharp mind. While there, he met with top investors and entrepreneurs from across the globe, all seeking out his expertise. His experience inspired the idea for his unique publishing company, Manward Press. Not only does Andy dish out top-notch investment advice (after all, he spent a decade as an advisor at one of Wall Street’s top brokerages), but his mission is to lead folks to richer, healthier lives through his science-backed Triad of Liberty, Know-How and Connections. His one-of-a-kind free daily e-letter, Manward Digest, is a true fan favorite.

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