You’re partially right, investor behaviour is the overarching factor to a successful investment career. However, Dalbar Inc, as you mentioned looks into mutual funds which is a **crucial factor**. This really sets up the investor for failure because of the a mathematical rule: Compounding.

Let me illustrate this point, take the graph below which shows the cost of fees over 30 years, starting with a 100k investment and assuming a mediocre return of a 7% annual return. For both the mutual fund and the ETF we take the average expense ratio which are as follows:

**Mutual funds**: 1.25% (Sadly I’ve seen many way above this figure)**ETF**: 0.40% (Indexes go as low as 0.08%!)

I think the result speaks for itself, we net difference in the final total asset is 150k which is 50% of the initial investment. This is because the amount paid in fees misses the compounded returns which is what makes investing so powerful.

If you combine this mathematical concept which the overwhelming proof that active largely underperforms active then I think it makes a compelling case as to why Dalbar Inc. performance figures are so poor.

I just want to clarify that I’m making this point because far too many people spend more time researching their next car purchase than their investments which has a far greater influence on their life & retirement. Further, I just think it’s unfair to take take the example of Dalbar to make a case against the stock market in a time where it’s increasingly important for people to take in charge their investments.

I strongly suggest you take a look at some of the books by John C. Bogle.