title: Investment vs Investor Performance description: [AFW S.2.5] Investment Principle #5 published: true date: 2026-06-30T08:08:32.550Z tags: editor: markdown dateCreated: 2021-05-04T05:04:43.225Z

Watch Investment vs Investor Performance (2023-04) VIDEO

People vs Products¶

“We don’t manage money, we manage people.” ―Nick Murray

Read Nick's This Time Isn’t Different - #33 - Part 2.15 - The Miracle of Modern Technology vs. the Immutability of Human Nature PDF

This is the fundamental principle that defines our financial philosophy.

Driven by emotions like fear and greed, clients often engage in such negative behaviors as chasing the hot manager or asset class, avoiding areas of the market that were out of favor, attempting to time the market, or otherwise abandoning their investment plan.

Great investors have understood that building long-term wealth requires the ability to control one’s emotions and avoid self-destructive investor behavior.

-Source: Capital Group Literature number INGEFL-050-0522

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What the Experts Say¶

"The investor is more important than the investment." ―Dick Fabian

"The dominant determinant of long-term, real-life financial outcomes is not investment performance, it's investor behavior. And the biggest determinant of one's behavior is the quality of the advice one gets, or doesn't get. An argument can be made that a professional Advisor's advice can add 6% of real-life returns to an investor's performance." -Nick Murray

“Proper investment strategy is as much of a psychological as an intellectual challenge. It is often best to seek professional help to structure and maintain a well-diversified portfolio.” ―Jeremy Siegel

"Psychology is probably the most important factor in the market and one that is least understood." ―David Dreman

"When the spaghetti hits the fan, don't just do something: stand there. This too shall pass. You see, what happens in the equity market has very little to da with what actually happens to the equity investor. That's because the dominant determinant of long-term, real-life outcomes is not the performance of markets but the behavior of investors." -Nick Murray

"Fidelity has done a study as to which clients had done the best at Fidelity. They were the people who forgot they had an account!" -James O'Shaughnessy

"Personal finance is 80% behavior and only 20% head knowledge." -Dave Ramsey

"Emotions are your worst enemy in the stock market." ―Don Hayes

"At the cornerstone of my convictions about wealth management is that one’s temperament trumps their intellect, one’s emotions supersede their agreements, and that human nature is the force which must be contended with above all others.” ―David Bahnsen

"If you cannot control your emotions, you cannot control your money." -Warren Buffet

“Individuals who cannot master their emotions are ill-suited to profit from the investment process.” ―Benjamin Graham

“Success in investing doesn't correlate with IQ.” ―Warren Buffett

“To be a successful long-term investor is easy in principle but difficult in practice. It is easy in principle because the strategy of buying and holding a diversified portfolio of stocks, forgoing any forecasting ability, is available to all investors, no matter what their intelligence, judgment, or financial status. Yet it is difficult in practice, because we are all vulnerable to emotional forces that can lead us astray.” ―Jeremy Siegel

“The investor's chief problem — and even his worth enemy — is likely to be himself.” ―Benjamin Graham

“I am thoroughly convinced that there are two predominant emotions or character traits that govern the investing habits of nearly all investors: Fear and Greed. The substantial preponderance of investing mistakes come from these two facets of human nature.

The existence of fear when things are bad is certainly not unnatural; an intuitive tendency to panic is part of human nature. This reality doesn’t make it any less destructive (and, I will add, it is a reality that properly trained wealth advisors were put on planet earth to counter-act). On the other side of the same coin is the greed that stems from the euphoria of when things are good—when risk and reality are clouded by what seems and feels like free or easy money. It can be character-based (“I heard my co-worker bragging about his wild returns, and now I have to find those same wild returns.”) or desperation-based (“I feel like I am behind in my retirement savings, but if I just have this one big hit, I will be back on track.”), but regardless of the motives driving it, when euphoric greed destroys clarity of mind, good things never happen in investing.” ―David Bahnsen

Read Nick's ATY 069 March 10 - Behavioral Coaching PDF

Read Nick's ATY 143 May 23 - Do You See It Now? PDF

Read Nick's ATY 144 May 24 - Self-Advocacy: Our Right and Our Duty PDF

Read Nick's ATY 145 May 25 - Break it to then Gently & Generally PDF