What is a common misconception about investor behavior according to studies?

The correct answer identifies a significant phenomenon observed in investing behavior. Studies have shown that many investors struggle to achieve their desired returns, often due to emotional decision-making, market timing attempts, and other psychological biases such as herd mentality. Investors may sell during market downturns and buy during peaks, which can lead to suboptimal investment performance. This behavior stems from a lack of understanding of market dynamics and an underappreciation of the benefits of a disciplined, long-term investment strategy.

On the other hand, the notion that investors always follow market trends does not account for the variability in individual decision-making processes. Furthermore, while some average investors might experience moments of great performance, consistently outperforming professional analysts is unlikely due to the latter's access to more resources and information. Lastly, although many investors may state their commitment to long-term investments, their actions often reveal a tendency to react to short-term market fluctuations, contradicting the idea that they prioritize long-term strategies. Thus, the correct answer highlights a pervasive challenge in investor behavior, rooted in psychological factors rather than a rational assessment of market conditions.