<i>Smart Investor Makeover</i>: Odds Are You are Gambling With Your Investments (Video)

The failure to fully understand the odds is one of the primary reasons why the average return for most investors is so dismal.
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Here's a mind twister for you: The odds of flipping a coin and getting a head is obviously 1 out of 2. The odds of getting four heads in a row is 1 out of 16.

If you flipped three times and got three heads, what are the odds of getting a fourth head?

The answer is still 1 out of 2.

Past performance of the coin toss does not affect future probability.

The SEC requires mutual funds to indicate that past performance is not indicative of future performance. This does not stop advisors and brokers from touting past performance of "hot" funds to their clients.

The failure to fully understand the odds is one of the primary reasons why the average return for most investors is so dismal.

In this week's Smart Investor Makeover video I discuss the importance of knowing the odds.

In less than three minutes, you could change the way you invest forever. I hope you enjoy it.

The views set forth in this blog are the opinions of the author alone and may not represent the views of any firm or entity with whom he is affiliated. The data, information, and content on this blog are for information, education, and non-commercial purposes only. Returns from index funds do not represent the performance of any investment advisory firm. The information on this blog does not involve the rendering of personalized investment advice and is limited to the dissemination of opinions on investing. No reader should construe these opinions as an offer of advisory services. Readers who require investment advice should retain the services of a competent investment professional. The information on this blog is not an offer to buy or sell, or a solicitation of any offer to buy or sell any securities or class of securities mentioned herein.

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