An Investor's Guide to Famous Last Words

One of my favorite quotes comes from Black Swan author Nassim Taleb: "People focus on role models; it is more effective to find antimodels -- people you don't want to resemble when you grow up."

It pays to learn from people's mistakes as much as from their successes. And boy, do investors ever make mistakes. In the 20 years ended Dec. 2010, the S&P 500 returned 9.1% a year, while the average investor earned just 3.8% a year, according to Dalbar. We buy high, sell low, mismanage risk, follow the crowd, and trade too much -- rarely with doubt, and always at our own expense.

What are investors thinking when they make mistakes? What's going through their heads? The frame of mind that guides the biggest investment fumbles might be best summed up with a list of famous last words.

Read Full Article »
Comment
Show commentsHide Comments

Related Articles

Market Overview
Search Stock Quotes
Partner Videos