In 2018, the average investor trailed the S&P 500 by 5.04%, according to the DALBAR QAIB study (1).

S&P 500 index = -4.38%

Average investor = -9.42%

Why?  Don't ask your brain, ask your intuition.

Having a conversation with your colleagues...

"I am sure that a recession is coming, how can the market maintain this growth?"  

"I totally agree, I just moved my portfolio to 70% bonds."

"That is a good idea."

Then you go home and trade your 401(k) from 70/30 equity to fixed income to 30/70.

What went wrong?

A risk tolerance questionnaire is a tool that advisors have used for years to determine your level of investment risk tolerance and your capability for taking investment risk.