Why the dead outperform the living in investing

The Nasdaq is up for 2020. US Stock Markets have recovered most of their gains since March.

Few predicted that, especially some of the “gurus” we often see on TV.

In this context, I was listening to an excellent webinar a few days ago.

One of the presenters brought up an excellent topic. Namely, studies show that dead people’s investment accounts outperform the living!

And yes, that is when we are comparing apples and apples, and not apples with oranges.

In other words, if you compare thousands of people on the same investment platform, dead people’s accounts outperform even though they are on the same vehicle and are often investing in the same asset classes.

The reason? Dead people didn’t panic sell during 2008 or March 2020.

Dead people didn’t panic about Trump’s election or Brexit. Dead people aren’t watching CNBC, the BBC or Bloomberg trying to analyse if they can time the market.

They are fully invested because they can’t panic sell……in fact the only reason they usually end up fully invested is that nobody knows they are dead and claimed the money!

The “behaviour gap” leads to investors being emotional with money. This is one of the biggest reasons for underperformance:

I have no doubt that for this reason if a similar study was done which compared the average results of prisoners with the general population, the prisoners would get superior investing returns for the same reason.

Murderers, sex abusers and kidnappers outperforming most of the population in terms of investing? Even many “gurus”?

Who would have thought it.

Further Reading

Will you beat the market listening to CNBC or Bloomberg?

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