Get this… A study put out by Dalbar shows how investors fared in the stock market between 1992 and 2011.

 The S&P 500 gained 7.8% p er year.

But the average investor earned just 2.1% over the same time frame.

How can thistock arrows be?  The majority of investors invest in stocks, so shouldn’t they should be very close to 7.8%?

Yes, they should, but investors panic and get out at the wrong time over and over.

We all know that investing for the long term with a buy and hold strategy is probably most investors’ best bet to becoming successful in the end.

Unfortunately, that is not the way it works.

Research that is being done now shows that the majority of investors in the stock market continue to sell and buy at exactly the wrong time. When the market is going up and is reaching a new high, the everyday investor doubles down or is just getting in. When the market starts to go down, they wait way too long to get out and experience huge losses of 25%, 35%, 50%, or more because they can’t stand the pain anymore.

What are investors to do? I am not a financial advisor, nor would I pretend to know the answers to solve these problems.  I will tell you my personal opinion is that I like real estate and have become discouraged with the stock market. I am sure I am biased since I run a real estate fund for a living, but there is some thing comforting to me in knowing how protected we are with our model .

It is this … if the real estate market were to take a drastic downturn, we would still be alright. We won’t be happy and our return will fall to probably 5% or less, but all we have to do is keep our single family residences rented. We currently keep our portfolio within the core rental market so that if that ever does happen, we can do exactly as I have just stated.

 One big important point is that rents don’t follow the value of homes.

If the home were to drop 25%, the rent will remain the same and sometimes even rise. Often during these times people have to downgrade so they tend to strengthen the core rental market.

Whatever your favorite investment is, the message is the same. Understand your timeline and think contrarian to the masses of the everyday investor. Don’t let it be the cruel truth for you.