So everyone has heard about the study in the past where a chimp throwing darts at stocks was just as likely to do as well (if not better) as many dedicated stock pickers.  Whether that is still true or not, Morningstar came up with some similar findings in their latest fund study.  The recent study analyzed investor mutual fund allocations and their overall success in regards to the marketplace.  The findings didn’t surprise us at all…

The great news is that overall, investors did a pretty good job of picking the best funds in almost in given category.  In almost all mutual fund categories, the majority of investors picked the best performing funds.  The bad news is that rarely did they invest on those top funds at the right time.  Many people on Wall Street reference this behavior as the “dumb money” following the “smart money”.  Meaning, the average investor is usually a little (if not a lot) late to the dance.  The “dumb money” is usually buying when they should be selling and selling when they should be buying.

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