In investing, as in life, it’s important to manage your expectations. There’s nothing quite like an unmet expectation to drive misery and misbehavior. That helps explain why fewer people own stocks today than before the Great Recession (54% now vs. 64% then). Many of those who left the market likely had no idea the market could fall so far so fast.

One way to manage your expectations is to have a working knowledge of regression to the mean.

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