How to beat your emotions when investing

As investors, we are our own worst enemies. We all think we are cleverer than we really are, and let our emotions get the better of us. Usually, we lose money, says Tim Bennett. Here's how to avoid that.

Investors are their own worst enemies. For proof of this, you need look no further than a bizarre statistic highlighted by Jeff Fischer on the Motley Fool website. Between 2000 and 2010, the best performing US mutual fund was the CGM Focus Fund. This fund managed to deliver a return of 18% a year on average, during a period when the American market the S&P 500 was essentially flat. That's impressive.

Now take a guess at how much the average investor in the fund made over the same period. You'd think they'd be laughing, right? Wrong. According to Morningstar, over that same period, the average investor in the CGM Fund lost yes, lost 11% a year.

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Tim graduated with a history degree from Cambridge University in 1989 and, after a year of travelling, joined the financial services firm Ernst and Young in 1990, qualifying as a chartered accountant in 1994.

He then moved into financial markets training, designing and running a variety of courses at graduate level and beyond for a range of organisations including the Securities and Investment Institute and UBS. He joined MoneyWeek in 2007.