MICHEL PIREU: The perils of perception when predicting market performance
From Morgan Housel, a partner at The Collaborative Fund and former columnist at The Motley Fool and The Wall Street Journal: According to JP Morgan, 40% of stocks have suffered "catastrophic losses" since 1980, meaning they fell at least 70% and never recovered. A survey by Franklin Templeton shows the S&P 500 gained 27% in 2009 — a phenomenal year. Yet 66% of investors thought it fell that year. According to Vanguard, 72% of mutual funds benchmarked to the S&P 500 underperformed the index over a 20-year period ending in 2010. "Professional investor" is a loose phrase. According to Google, the phrase "double-dip recession" was mentioned 10.8-million times in 2010 and 2011, but it never came. There were virtually no mentions of "financial collapse" in 2006 and 2007, but they did come. A similar story can be told virtually every year. Bloomberg says the 50 stocks in the S&P 500 that Wall Street rated the lowest at the end of 2011 outperformed the overall index by seven percentage poin...
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