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Trading and how to avoid bad timing mistakes
If trading's all about timing, how do you judge it right? Many investors are failing to capture the the full returns available to them because of their unfortunate decisions; that's according to research by Tim Strauts from Morningstar.
Investor Return is a Morningstar calculation. It factors in
the timing of the fund-flows no matter if the investors bought at the top or the bottom of
the market. This is done to estimate the
average return an investor would have received in that fund.
The chart compares the 10-year average total return for the major asset classes, to the 10-year average Investor Return. Here it becomes clear that on average, investors are losing about 2.5 percent per year to poor market-timing decisions.
Based on the results from the data, traders who wish to avoid poor market-timing decision should focus on a strategic asset allocation plan and thereby aim to filter out all the noise of other activities happening in the market.
01:34 minutes
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