CHART: Investors Buy And Sell Stocks At Exactly The Wrong Times
The folks at BlackRock are quick to remind people that they are terrible investors.
For their new Chart Of The Week, BlackRock overlays the performance of the S&P 500 with equity mutual fund flows.
"Unfortunately, investors often take actions counterintuitive to investing best practices," they write. "In an ideal world, investors 'buy low, sell high.' Though the rule seems simple, we've often seen investors do the exact opposite, especially during volatile times."
As you can see from the chart below, fund flows are low when prices are low, and they are high when prices are high.
But Barry Ritholtz of The Big Picture blog notes that it's not that simple.
"It is much more nuanced than BlackRock is explaining," said Ritholtz in an email to Business Insider. "Yes people buy and sell at the wrong time —but that's HOW tops and bottoms occur. You could not get those lows WITHOUT lots of sellers dumping stocks at once.
"People respond to prices, and those prices respond to what people are doing," he added.
