Investors who are guided by their emotions risk a plethora of negative results. The emotion-driven activity may counter what they’re ultimately out to achieve. Consider the implications resulting from just one area that emotion-based investing has adverse effects – trying to time the market.
The team at Fidelity Investments crunched some numbers – they tracked a hypothetical $10,000 investment made on January 1, 1980, and tracked the roughly 10,000 investment days since. The results of missing just 0.001% of those days resulted in a 50% reduction in investment gains.