Mental Landmines

When you look at the annual returns for the S&P 500 index for the past five years as displayed in the table below, what do you think are the odds of the S&P 500 earning a positive return in 2014?

Many would predict that the odds are against a positive return in 2014, simply because they think the bull market has lasted too long. Unfortunately, some investors will adjust their portfolios or move out of the market altogether because of this thinking. But when you understand the gambler’s fallacy, you might think twice.

Read more from Sheldon McFarland, VP, Portfolio Strategy & Research at Loring Ward.