Peter Mallouk - The 5 Mistakes Every Investor Makes and How to Avoid Them: Getting Investing Right

1. Introduction
2. Chapter 1
3. Chapter 2
4. Chapter 3
5. Chapter 4
6. Chapter 5
7. Chapter 6

Second Edition

PETER MALLOUK

Copyright 2021 by John Wiley & Sons, Inc. All rights reserved.

Published by John Wiley & Sons, Inc., Hoboken, New Jersey.

Published simultaneously in Canada.

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ISBN 9781119794332 (hardback)

ISBN 9781119794356 (epdf)

ISBN 9781119794349 (epub)

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This book is designed to provide information that the authors believe to be accurate on the subject matter it covers, but it is sold with the understanding that neither the authors nor the publisher is offering individualized advice tailored to any specific portfolio or to any individual's particular needs or rendering investment advice or other professional services such as legal, tax, or accounting advice. A competent professional's services should be sought if one needs expert assistance in areas that include investment, legal, tax, and accounting advice. This publication references performance data collected over many time periods. Past results do not guarantee future performance.

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Over my career as a wealth manager, I have met thousands of individuals searching for a better way of investing. I noticed early on that most of the clients coming on board with my firm were terminating a prior advisor. It became clear to me that these clients weren't getting what they had hoped from their former advisors. While at times the issues were related to communication, relationships, and the like, sometimes the change was because the client wasn't getting the returns they had hoped, or their former advisor had blown up their portfolio. Mistakes had been made along the way.

Many investors don't enjoy investing, don't have the time for it, or don't feel they are particularly good at it. This type of investor searches for an advisor to alleviate the burdento show them the way. Unfortunately, many if not most advisors make the same mistakes individuals often make. This is the tragedy of the financial services industry. As I have watched fortunes made, lost, and sometimes rebuilt again, I have observed the main problems that led to the deterioration of wealth. The conclusion is quite simple: In most cases, if an investor has greatly underperformed from an investment perspective, it is not because of the markets, but because of their own, or their advisor's own, mistakes. All of us, at times, are susceptible to at least one of these mistakes. Many of the greatest investors of all time acknowledge they have made them or are aware of them and actively put up mental roadblocks to prevent themselves from making them. For years, I have spoken about these mistakes, and this book will cover how to avoid these pitfalls and show a clear path toward achieving investment success.

This book wouldn't be possible without the ongoing efforts of Molly Rothove, Jessica Culpepper, James DeWitt, Brenna Stewart, and Jim Williams, all of whom contributed to this effort as well as to my newsletters, which are the constant source of in-house comedy prior to the editing process.

Special thanks to all of the incredibly talented people at Creative Planning, including those who helped with the research for the behavioral section of this book: Sarah Ayler, Andrew Horsman, Jeff Juday, Ashley Moulis, Meghan Perry, Conner Sivewright, Stacy Smith, and Chris Wolff.

A huge thank you to the clients of Creative Planning. I have learned so much from my clients over the years. Most importantly though, I learned that these are the type of people who make America what it is: the greatest place on earth to live. These folks make the economy go and grow and many of them have lived or are living the American Dream. My constant search for every possible way to help them has resulted in many of the things we do at my firm, and in the contents of this book.