Over the past 5 years, the U.S. stock market has been much like a tide, experiencing
ebbs and flows.

The myth of the success of the average investor - how can investments do so well and the average investor do so relatively poorly?

The reality is that investors buy high and sell low. While the S&P 500 Index has grown at an 11.8% annual rate, the returns earned by the average equity fund investor since 1986 have averaged just 4.3% per year.

Conclusion: Most investors just chase the “hottest” stocks or mutual funds rather than developing a sound long-term investment plan. A strategic, personalized investment plan based upon your particular circumstances and tolerance for investment risk, combined with the ongoing counsel of an Investment Advisor like Trident, can help you stay on course and navigate through volatile markets.

As the chart below indicates, security selection determines only a small portion (4.6%) of investment performance. What really matters is the proper allocation of assets across stocks, bonds and cash. Asset allocation is the critical element of any successful investment plan.

UBS asset allocation study

Bottom Line: According to this study, asset allocation—America’s
most admired, but least practiced investment discipline—accounts
for 91.5% of the variation in portfolio returns.


Conclusion: Strategic asset allocation can help manage
portfolio risk while stabilizing returns.