Buying high, selling low: This is irrational behavior. But it’s hard to be fearful when others are greedy and to be greedy when others are fearful.

Forgetting arithmetic: It’s “a virtual certainty” that the average investor will earn the market return minus fees. The smart strategy is to seek ultra-low fees and high diversification.

Chasing shiny objects: Cathy Wood’s Ark Innovation ETF earned almost 10% annually from Oct. 31, 2014, to May 31, 2023. But the average investor’s return was -25% annually. Most people poured money into the ETF after it earned a wild 153% return in 2020.

Confusing knowledge with unique knowledge: Deciding to buy more Nvidia because AI is popular and buying stocks when the Fed lowers rates are examples. “I call this the ‘markets are stupid hypothesis.’ Somehow people think they are the only ones with this knowledge and it hasn’t yet been priced into the market.”

Suspending common sense: This alludes to Clark’s hatred of most annuities. Roth wrote: “Here’s a product that gives you the upside of the market with no downside risk. (People buy it without even stopping to think how the company selling it can pay handsome commissions, cover their overhead, and still make a profit.)”

Creating unnecessary complexity: “It’s not the number of holdings that make one diversified, it’s the securities within the holdings.” Owning a single U.S. total stock market fund and a single total international stock market fund will make you much more diversified than owning hundreds of individual stocks.

Confusing speculation with investing: Roth argues that gold, crypto and futures markets aren’t investing because they don’t produce cash like companies (stocks) do.