Where do investors tend to put their money in a bear market?

Investing, Asset Allocation
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December 2016
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The answer to the question of where DO investors put their money and where SHOULD they put their money give two very different answers.

Where DO they put it? The thing about bear (and bull) markets is that you don't know that you are in one until you are pretty deep in one. So, once average investors have figured it out (which could be way more than half way through its cycle), they panic, sell stocks, and go to cash and short term bonds. Some try to seek out uncorrelated assets like certain commodities and real estate. The more reckless ones buy inverse triple-leveraged ETFs, but they are so beyond help, we won't bother addressing them.

This is all futile. Market timing does not work. Don't herd with a crowd that loses money all the time. In the last 30 years, the US stock market has returned an average of 10.35% per year, while the average US investor has made 3.66% per year. The majority of the difference between those two numbers is a result of behavioral mistakes revolving around market timing.

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