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View Poll Results: How much of the Return available from the stock market is realized by the average investor?
95% 3 6.52%
80% 10 21.74%
50% 11 23.91%
30% 8 17.39%
10% 14 30.43%
Voters: 46. You may not vote on this poll

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Re: Average Investor Returns
Old 08-31-2006, 05:35 PM   #41
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Re: Average Investor Returns

I would think that anyone (particularly young people) considering entering the equities markets and not already as enlightened as you, would be very interested in knowing how the average investor fares.
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Re: Average Investor Returns
Old 09-01-2006, 04:41 AM   #42
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Re: Average Investor Returns

I would point out (to LOL! and maybe some of the other 10-percenters) that hellbender was talking about STOCK investors and not bank accounts and lottery tix.

what do you believe is actually achieved by the average stock investor
a cross section of equities investors including those who may from time to time engage in activities that are not in their best interests as well as those who have superior stock market investing skills.
Don't want to quibble, but that's an important distinction to make, and I wonder how much the votes would diverge if that had been super-clear=> equity investments...

Hellbender in one sense is being a little tendentious: stocks are even riskier than we think since most investors don't end up with their full value; and in another sense is preaching to the converted: indexes and ETFs avoid high fees and 'churn' and give you as close to a real market return as is possible -- let's say the 93%-98% figger -- without having to do risky stock-picking.. a maxim already taken to heart here. (Which doesn't mean either that he is incorrect or that the poll is worthless.)

Education is important!! But I take this scenario as a challenge.. instead of thinking "oh, the average investor doesn't do as well as advertised in the equity market.. run away!", I think (as I believe many here do) "Let me avoid the reasons that the average investor does poorly in equities, so that I may be above average." (Lake Wobegon, here I come* )* But, no matter, I should be happy if people run away -- more buying opportunites for me!

I think everyone here is trying to get the message out about preparing adequately for retirement. I don't know what we can do about the "millions.. too stupid". At the risk of being too Darwinian I would say they will get by on SS and those who have invested well will be that much better off in comparison and will feel richer, even in the eventuality of bearing some of the burden for the first group. If everyone, OTOH, were investing efficiently then our gains might be more limited (?).. I see it as a question of paying now or paying later and am not that concerned about it.

brewer is right.. "kids today" would probably need to be super-savvy to invest in RE at this point.. not hard to conceive they might be better off in equities. I came across some articles on the RE market in the early '90s just coincidentally. That's when I happened to have bought my first house: a 2-family in Boston for $135k. I sold it 2 years ago for $630k after putting in about $100k of work over 10 years. I bought it from a bank that had foreclosed. I was completely oblivious to the RE market at the time: I just thought it would be keen to buy a house and here was this one right down the block; I walked past the "For Sale" sign every day for weeks and weeks on my way to the bus stop. But for me to have "lucked out" meant a painful episode indeed for foreclosure guy.. who knows if he has recovered financially, or if he thinks RE is a good investment? There are ups and downs in everything.

brewer: is that "money brain" or "monkey brain"!*
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Re: Average Investor Returns
Old 09-01-2006, 09:38 AM   #43
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Re: Average Investor Returns

Originally Posted by brewer12345
What percentage of the return available in the RE market does the average investor capture?
I donít know.* Real estate markets are decentralized so there is no readily obtainable data upon which to base an opinion or analysis.* *To my knowledge there has not been one single study that has investigated the actual performance of individual investors directly holding investment real estate.*

Roger Ibbotsonís work is often quoted by equities investors to back up claims of the superiority of stocks as an investment vehicle as compared to real estate.* However, his work has virtually no relevance to individual investors.* He studied the (hypothetical) returns from multi-million dollar properties owned by pension funds, free and clear of mortgage financing.

To my knowledge, Ibbotson has never studied and reported on the actual investment results obtained by individual real estate investors.* (or equities investors for that matter)*

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Re: Average Investor Returns
Old 09-01-2006, 09:46 AM   #44
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Re: Average Investor Returns

Originally Posted by brewer12345
I agree that the US is desparately in need of even basic financial literacy education for the general populace, but money is such a taboo in this country that I seriously doubt you will ever see widespread education on the subject. Plus I rather doubt it would stop most people from doing painfully short-sighted things with their money. Its really hard to get the money brain evolution has left us with to act with cold rationality.
I heard the definition of the U.S. Super Consumer the other day:

"Spending money you don't have, on things you don't need, to impress people you don't like"
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Re: Average Investor Returns
Old 09-01-2006, 09:48 AM   #45
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Re: Average Investor Returns

Originally Posted by hellbender
To my knowledge there has not been one single study that has investigated the actual performance of individual investors directly holding investment real estate.*
I don't know of a good study on that one either. I would agree that it would be really ough to generalize such a locally oriented market.

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