“The dominant determinant of long-term, real-life returns is not investment performance but investor behavior.” What does this mean? Wealth Adviser Clarke Holt explains, today on Elevate Wealth.If you need help staying the course, we’d be glad to help! Schedule a free consultation. Just visit our Website below, and click the Let’s Talk button!

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FULL TRANSCRIPT:
I had lunch with a friend last week, and he said, "I just heard this quote: 'The dominant determinant of long-term, real life returns is not investment performance but investor behavior.' What does this mean?" Yeah, I've heard this quote quite a few times. It's similar to another one by Benjamin Graham: "An investor's chief problem, and even his worst enemy, is likely to be himself." This is what we in the financial industry call Behavioral Finance, which is how people's emotions, biases, and psychology affect their financial decisions. Unfortunately, it can lead to irrational, unpredictable behaviors in investing and money management. For example, there's a certain behavior called overconfidence. In investing, this is when euphoria hits you after you invest in something and see a gain, and then you begin to stop fearing principal loss. With overconfidence, investors tend to overestimate their own abilities and underestimate risks, leading to excessive trading or taking on too much risk. Sometimes your only concern is that somebody somewhere owns stocks or has a portfolio that's going up more than yours. At our firm, Elevate Wealth Advisory, we try to help clients overcome this behavior. Just remember, in euphoric times, the best strategy is disciplined diversification and a long-term view. If you're concerned that you're investing based on your own emotions and biases, we can help you stay the course. Visit elevate-wealth.com and click the "Let's Talk" button. Thanks!

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