Roger Ibbotson Lange Money Hour Snippet Part Two

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Jim Lange: Human beings are hardwired to be bad investors. That is, we are programmed to run when we are in fear. Unfortunately, that’s a bad reaction when the market is down. Likewise, when things are very good, we want more of it. Unfortunately, that’s the wrong reaction when stocks are at their peak. Roger Ibbotson understands these phenomena very well.

Roger Ibbotson: Think how you felt back in March 2009. That’s after the market had fallen about 45 percent. People were really scared at that point. The stock market had fallen so much. Now, it turns out that if you had gotten out then, you would have missed this huge rise that just happened. And actually, we’ve recovered almost all of the losses that actually occurred in that financial crisis, from the stock market. The market is about back to where it was. The tendency is when you’re most scared is actually sometimes the best time to be in the stock market.