Indian tribes in the Pacific Northwest often tell stories of the Raven. This mythological character is sometimes helpful. But he’s also a trickster who can cause a lot of trouble. Raven is a lot like a stock market puppeteer. He helps some investors. But he sabotages most. He loves to lay traps, giggling like crazy when people get snared.

Most investors know that U.S. stocks have earned decent returns over multiple decades. Here’s a quick look at the past 40 years.

S&P 500 10 Year Returns

Decade Annual Compound Return
2005-2015 7.3%
1995-2005 9.07%
1985-1995 14.88%
1975-1985 14.32%

Sources:; S&P 500 Factsheet

Most investors, however, didn’t earn those returns. Raven saw to that. He likes to trick people into doing silly things. When stocks fall, he giggles. He knows that many investors will stop adding money. When stocks rise, he laughs because those who shun stocks when they’re cheap often buy when they rise. Raven loves to make the markets jump and fall. That’s why 2016 could be one of his favorite years ever.

Stocks have jumped around like an Indian rain dancer. They drop 2.5 percent one day. They gain 2 percent the next.

U.S. And International Stocks
January 1, 2016 to February 17th, 2016

U.S. And International Stocks
Source: Vanguard’s S&P 500 and Vanguard’s International Stock Market Index; Morningstar

If a mutual fund averages a compound annual return of 7 percent per year, its investors should earn that return. But most don’t. They like to add money when the market appears to be stable. They’re afraid to add money when the market jumps around.

Instead of dollar cost averaging (investing the same amount every month) Raven tricks many people into buying high and selling low.

According to Morningstar, during the 10 years ending December 31, 2013, the typical mutual fund gained a compound annual return of 7.3 percent after fees. The average investor in those same funds earned a compound annual return of just 4.81 percent. That’s an annual gap of 2.49 percent per year.

That time period included the big market drops of 2003 and 2008. Raven wreaks the most havoc when the markets drop and jitter.

U.S. And International Stocks
Source: Morningstar

Investors scalp themselves. Back-tested stock and bond market studies show that retirees should be able to withdraw 4 percent from their portfolio each year. If they increase those withdrawals to cover the rising cost of living, they shouldn’t run out of money. But those studies assume that the investor is rational.

Once Raven pulls his strings, the game completely changes. Retirees who withdraw 4 percent annually and lose another 2.49 percent per year to silly behavior could soon be living in a tent.

It’s just as bad for young investors. If the market averages a compound annual return of 7.3 percent per year, but an investor earns just 4.81 percent, it could cost them hundreds of thousands of dollars over an investment lifetime.

Poor Investment Behavior Can Cost A Lot Of Money

With Silly Behavior Without Silly Behavior
Amount Invested Annually $10,000 $10,000
Duration 30 Years 30 Years
Assumed Fund Returns 7.3% 7.3%
Fund Returns After Impact of Behavior 4.81% 7.3%
End Portfolio Value $674,047.25 $1,069,951.89

I’ve kept a personal blog since 2008. When stocks skitter or fall I get the same kind of questions. Recently, a reader identifying herself as Jen wrote that her portfolio of stocks and bonds hasn’t made money since she began investing in 2015. Disappointed, she now wants to put her money into a low interest savings account. Raven will make her a statistic.

Yesterday, an investor who identified himself as Dejan wrote, “In current market conditions it seems [a] better solution to keep the [money in] cash or invest in gold for a while till the markets stabilize.” Raven, again, is pulling at his strings.

Nobody knows how stocks and bonds will perform over the next year or ten. But one thing is certain. Raven rewards investors who have a solid, consistent plan. Build a low-cost portfolio of stock and bond market index funds. Add fresh money every month. Rebalance the portfolio once a year. You won’t make money every year. But over your investment lifetime, your returns should be decent. Sadly, we can’t say the same thing for most investors. Raven, the trickster, will keep having fun.

Andrew Hallam is a Digital Nomad. He’s the author of the bestseller, Millionaire Teacher and The Global Expatriate's Guide to Investing: From Millionaire Teacher to Millionaire Expat.