Small Investors Stuck in Catch-Up Mode

Investments in emerging markets and oil have been exceptional, leaving the U.S. stock markets in the dust for most of this decade.

Mutual funds that invest in emerging markets have posted average gains of 24% a year in the past three years, according to Morningstar, while the price of oil has risen fivefold since 1998 and by 65% this last year alone.

Sophisticated investors, as usual, got in at the beginning. Odds are that individual investors will climb onboard just as these and other high-return investments are heading downhill again, according to John Nofsinger, assistant professor of finance at Washington State University at Pullman and author of The Psychology of Investing. ...