Unit 1 · Level 4 · The behavior gap
Review: mind the gap
Investors earn roughly 1-2%/yr less than their own funds by buying high and selling low. Performance chasing feeds the gap; euphoric and panicked headlines time it; compounding turns it into tens of thousands of euros. The cure is boring: automate, ignore, hold.
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What you get asked
The 'behavior gap' is the difference between…
Same fund, two numbers: the brochure return and the human return. Timing mistakes create this particular gap, not fees.
Match the behavior to its consequence
Three behaviors widen the gap; one closes it. Guess which one requires the least effort?
Money tends to flood into a chart-topping fund just as its hot streak ___ .
Rankings celebrate what already happened. By the time a streak is famous enough to attract crowds, its best years are usually behind it.
Headlines scream 'Markets in meltdown: worst week in years!' Your plan runs a monthly standing order. What do you do?
Not selling is the core skill; the standing order quietly buys the dip without you having to be brave. (Doubling down treats fear as a certainty, and it isn't.)
Over 30 years, a 2%/yr behavior gap on a €10,000 investment costs roughly…
€80,000 versus €40,000 in our example: one lost doubling. You've seen the enemy and it has your fingerprints. Unit 2: what a century of markets teaches. 🐜
The rest of this unit
Funds do fine; their investors do worse. Close the gap between you and your own money.