Pete Rose & Investors: More Often Then Not Are Their Own Worst Enemies

Pete Rose & Investors: 

 Their Own Worst Enemies

At this point in his life, Pete Rose should have his bust in Major League Baseball's Hall of Fame. He should be employed by the Cincinnati Reds or The Philadelphia Phillies serving in a front office position passing along to the next generation of players what it takes to become a successful player. He should be serving as a global ambassador for America's pastime.

I base this opinion based solely what he did on the field as a player. No one was more dedicated to his profession or team then Pete Rose. Through hard work and dedication he put himself at the top of the sporting world, and all that that brings with it was within his grasp.

Off the field has not been where he has shined. He gambled on, denied he gambled on, and then admitted that yes he did bet on Major League Baseball games. Now it is coming to light that he was having relations with 16 and 17 year old girls during his playing days. Not only has he hurt his chances of one day being voted into the Hall of Fame, he has putting himself in the position of being a social outcast.

Worst of all these are things that Pete Rose has done to himself. No one forced him to bet on baseball. No one forced him to have sex with teenage girls. Those decisions and behaviors were made by one man, Pete Rose, and Pete Rose will be the one to suffer the consequences.

Unfortunately, the overwhelming majority of investors find themselves in a similar situation. They are in position to enjoy all that free market capitalism has to offer, a comfortable retirement, security, the ability to help their children, give to good charities, etc, but through flawed behavior and thinking they find themselves disappointed by what could have been.

Look at the annualized long-term rates of return of just a few investments below from 

1927 through 2016:

U.S. Large Company Stocks    10.02% 

U.S. Micro Cap Stocks             12.38%

U.S. Small Cap Value               14.91%

(Past performance is no guarantee of future performance)

According to the Dalbar Corparation's "Quantitative Analysis of Investor Behavior Report," from 1987 through 2016 the average stock mutual fund investor's annualized return was just 3.98%. The average investor is getting a fraction of what the market is producing. Just like Pete Rose, the investor's returns are behavior driven, not market driven.

Just like Pete Rose seems to have been hooked on the need for action and living on the edge, investors are driven to try and pick the winning stocks, time the market and find the top performing investment managers. Their American Dreams aren't taken from them, rather they are surrendered as the result of years and years of behaviors that set them up for ultimate failure. 

Unfortunately, not until Pete Rose or investors start looking at their own behavior will lasting changes begin to occur. 

Brendan Magee is the founder and president of Inevitable Wealth Coaching. With questions or comments e-mail brendan@coachgee.com or call 610-446-4322.