Why Smart Investors Shoot Themselves in the Foot

Wall Street is not rigged. The problem is that it provides the tools for small investors to shoot themselves in the foot, said Spencer Jakab, author of Heads I Win, Tails I Win. 'People's performance is extremely poor and its self-inflicted,' said Jakab. 'The weapons are given to you and you load them and fire them. It's shocking because people really have no idea how poorly they do at investing.' Jakab write an edits the 'Heard on the Street' column for The Wall Street Journal. Prior to becoming a journalist, Jakab was a top-rated stock analyst covering emerging markets at Credit Suisse. Jakab said individual investors should invest passively in index products, as opposed to betting on last year's star fund manager who will likely see performance revert to the mean. 'It's essentially a coin flip and you are paying over a percentage point of your returns for him to do it,' said Jakab, adding that in this low-return world 'a percentage point means a lot' over many years.