Michael Marco is Director of Investment Research at Wealthsimple. Michael began his career as an Investment Associate at Bridgewater Associates, researching equities strategies and leading a team to provide strategic investment advice to large institutional clients. Prior to joining Wealthsimple, Michael led investment research and development efforts at an alternative-data hedge fund. Michael holds a B.A. from Yale and a J.D. from NYU.
Last updated December 2019
One of the biggest mistakes investors make is basing decisions on recent performance. This can mean buying more shares of a stock that has shot up, or selling shares after the price has plummeted. Research has shown that, more often than not, this “performance-chasing” behaviour can be very harmful.
Why do investors do this? It may be because they don’t understand the volatility they should expect in the short term to reap gains in the long term. To help our clients avoid this trap, we’ve created a three-step framework for thinking about performance for long-term “passive” portfolios like ours, which are not designed for active trading. They are designed with the aim of growing your money gradually over time.
Set Your Time Horizon and Risk Tolerance