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Don’t Make Me Say I Told You So 159

only 25%, would probably be more likely to invest their money
and stay with their plan over the long term.

In fact, data from Morningstar shows that investors make

strikingly different asset allocation decisions when shown one-
year and 30-year stock market returns.

Short-Term Focus: Avoiding Potential Near-Term Losses
Choice of asset allocation after examining different return distributions

When shown a distribution of one-year When shown a distribution of 30-year
returns, investors allocated 40% to stocks. returns, investors allocated 90% to stocks.

10%
40%

Stocks
60% Bonds
90%

Source: Morningstar, 2020

This focus on the short term builds a poor foundation for
making investment decisions. Do you, or does anyone you

know, try to assess daily, weekly, or monthly the value of their
home or other real estate investments? Are decisions made to

hold or sell the property or properties based on those values?
No. Investors need to treat their stock market investments the

same way. Liquidity is both a blessing and a curse.

Chapter 4: The Most Common Investor Mistakes