Research studies have consistently shown that investors do worse than the mutual funds they invest in. And depending on what study you read, the shortfall is sometimes quite substantial.

David Sung, from Nicola Wealth Management in Vancouver, has written an article about just this phenomenon. In it he references a Dalbar study that shows a 7% return gap between the S&P 500 index and the average U.S. investor over the 20-year period ending 2006. In the article, David reviews the reasons why this happens and outlines a "thumb sucking" strategy for preventing this shortfall from happening in the future.

It’s a good read and a good reminder. We’re all for strategies that keep us acting rationally and prevent us from blowing our portfolios up at market extremes.