Investor behavior

Improving investing outcomes by minimizing investor bias

May 14, 2024

A line chart that shows how market expectations track trailing market returns. It is based on the Vanguard Investor Expectations Survey, a bi-monthly survey of approximately 2,000 Vanguard personal and 401(k) investors. This survey has run every other month (February, April, June, August, October, and December) since February 2017. Data are for the period February 28, 2017 to June 30, 2023. The results show that as trailing returns dropped from 5.8% in February 2020 to –1.2% in April 2020, expected returns dropped from 6.4% to 2.2%. In addition, expected returns were a modest 0.6% in October 2022 when trailing returns were –19.0%.
This chart is an analysis of a random sample of about 100,000 Vanguard investors who initiated a position in Vanguard Total Stock Market ETF (VTI) between January 1, 2018, and December 31, 2022. Performance groupings are rounded to the nearest whole percentage number; i.e., the 0% cohort comprises those who realized returns between –0.4% and 0.4%. The results show that those in the 0% cohort have the highest probability of selling at 0.30% followed by cohorts in positive territory, which range from 0.23% to 0.26%. For cohorts in negative territory, the probability of selling was generally lower, ranging from 0.17% to 0.24%.
This chart is based on Vanguard administrative data for about 2 million Vanguard Personal Investor clients with taxable accounts and/or IRAs as of December 31, 2022 who opened their first accounts between 1995 and 1999 or between 2001 and 2005. It shows that investors who opened accounts in the 1990s when equity markets were more favorable continue to have more aggressive portfolios than investors who opened accounts in the early 2000s after the bubble burst. For instance, 34% of those who opened accounts in the 1990s hold all equity portfolios versus only 25% who opened accounts in the early 2000s. In addition, only 8% of those who opened accounts in the 1990s hold zero equity portfolios versus 13% of those who opened accounts in the early 2000s.


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