What's Costing Investors 1.2% a Year?
The Hidden Cost of Investor Behavior
The market is not always the biggest obstacle to long-term investment success. Often, the bigger challenge is how individual investors react to the market. When people buy after strong performance and sell after declines, they can miss out on returns even when they own good investments. A 2025 Morningstar study found that over the last decade, individual investors earned about 1.2% less per year than the actual funds they owned1. That difference may sound small, but over time it can meaningfully reduce wealth.
When Human Instincts Get in the Way of Good Investing
Investors don’t usually fall behind because they lack information. They fall behind because markets have a way of turning normal human instincts against us. A sharp decline makes losses feel immediate and personal, creating pressure to sell simply to stop the discomfort. A dramatic headline can make the most recent news feel more important than years of long-term evidence. Once we form a view, it becomes easy to notice only the facts that support it and ignore the ones that challenge it. And when everyone around us seems worried, moving with the crowd can feel safer than staying disciplined, even when the crowd is reacting emotionally.
These aren’t mistakes made only by inexperienced investors. They’re hardwired into human nature, and awareness alone isn’t enough to overcome them. The real challenge is that these instincts persist, which is why a disciplined process must be built to counteract them.
The Limits of Individual Judgment
Knowing biases exist doesn't make them disappear. That's why we didn't build a process solely around individual discipline. We built one around collective judgment. Our investment committee brings together professionals with different experiences, skill sets, and viewpoints, creating an environment where ideas are challenged, assumptions are tested, and emotional reactions are less likely to drive action. The goal isn't to eliminate human nature. It's to build a process that's stronger than it.
Where Collective Judgment Adds Perspective
Bias thrives in isolation. When ideas are tested by experienced colleagues with different perspectives, overconfidence is challenged, assumptions are scrutinized, and emotional reactions are tempered. The result is a more disciplined decision-making process where one person's blind spot is often another person's expertise.
Why Structure Matters More Than Opinions
A committee is only valuable when it is structured to challenge assumptions, not simply echo the loudest voice. In volatile moments like March 2020, when markets were falling and fear was widespread, discipline mattered more than opinions. A structured team process helps keep decisions grounded by sizing positions deliberately, holding the line on the predetermined buy and sell disciplines, and maintaining steady risk oversight across the portfolio.
How This Benefits Clients
Altman Advisors has created a disciplined process designed to limit the influence of fear, overconfidence, and emotion. Investors often underperform not because they own the wrong investments, but because they react at the wrong times. Our focus is on maintaining a team-based process that helps reduce emotional decision making.
Putting the Process to Work for You
If you’d like to see how this disciplined, team-based approach applies to your own portfolio, the team at Altman Advisors would be glad to walk you through it. Reach out to schedule a conversation, and let’s make sure your process is working as hard as your investments.
1 Morningstar, Mind the Gap 2025: The More Investors Traded, the Less They Made (August 13, 2025).
Disclosure: This material is provided for informational and educational purposes only and is based on sources believed to be reliable; however, Altman Advisors does not guarantee the accuracy, completeness, or timeliness of the information presented. The opinions expressed are those of Altman Advisors as of the date of publication and are subject to change without notice. This content should not be construed as personalized investment, tax, legal, or accounting advice, nor as a recommendation to buy or sell any security or adopt any particular investment strategy. Individuals should consult their own legal, tax, and financial professionals regarding their specific circumstances. References to market performance, economic forecasts, sector views, investment themes, or asset classes are provided for informational purposes only and should not be construed as investment recommendations or guarantees of future performance. Any forward-looking statements are based on current expectations and assumptions and are subject to risks and uncertainties that could cause actual results to differ materially. Past performance is no guarantee of future results. All investments involve risk, including the possible loss of principal.
Altman Advisors is a Registered Investment Adviser. Advisory services are offered only to clients or prospective clients in jurisdictions where Altman Advisors and its representatives are properly registered or exempt from registration. No advisory relationship is created by this material, and no investment advice may be provided unless and until a client agreement has been executed.
