From the Beginning: The Behavior Gap Sketches
Take a hard look at your investments. Do your real-life returns fall short of the rates touted in the media? If so, you’re not alone. Historically, we’re bad investors—the numbers show we buy high and sell low. This behavior creates a gap between individual returns and reported investment returns. We call this difference the Behavior Gap™.
Another early sketch also highlighted the idea that too often we treat investing like entertainment. However, you can’t afford to confuse investing and entertainment. Go to the movies instead. Major mistakes happen when you try combining investing and entertainment. And those mistakes can cost you, leading to a gap between individual returns and reported investment returns.
Finally, there’s the simple, but not always easy, way to outperform your neighbors. It won’t be because you found better investments. It’ll be because you behaved better than they did. It’s that simple. You see, in general, we’re bad investors—we tend to buy high, sell low. This behavior creates a gap between individual returns and reported investment returns.
These sketches are at the core of what makes the Behavior Gap different from everything else out there. The Behavior Gap is about taking big ideas and making them easier to understand so you can learn how to close the gap on your investment returns.