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You're Smarter Than They Thought.(stock funds)
- Article from:
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Kiplinger's Personal Finance Magazine
- Article date:
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April 1, 2008
- Author:
- Anderson, Thomas M.
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Copyright informationCOPYRIGHT 2008 The Kiplinger Washington Editors, Inc. This material is published under license from the publisher through the Gale Group, Farmington Hills, Michigan. All inquiries regarding rights should be directed to the Gale Group. (Hide copyright information)
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Byline: THOMAS M. ANDERSON
YOU'VE PROBABLY HEARD this grim fairy tale: Plunging stocks provoke jittery investors to yank money out of mutual funds. In their rush to the exits, these saps miss the first wave of the next bull market. Eventually, as the sting of their losses wears off, they realize their stupidity and jump back into stock funds just as the bear is about to pounce again. And the vicious circle of market mistiming goes on.
Frightening indeed, but not necessarily true. During times of market turmoil-and now would certainly qualify-stock-fund investors usually sell less, not more. Why? "They fear realizing losses," says Avi Nachmany, research director at ...