We also try to be slightly contrarian in our outlook. Other investors fall victim to black holes by trying to time the market. Attempting to predict market movements is usually futile. Market gains generally occur in comparatively short bursts. It is also important for investors to be realistic about what is a reasonable return to expect without taking undue risks.
Many people become victims of investment black holes by reaching for excessive returns.
We do not recommend using leverage or derivatives in portfolios to enhance returns. As we have seen so vividly in the recent past, this is a double-edged sword. It is wise to be skeptical of extravagant claims regarding investment returns. They may not be very tax sensitive, no doubt to their clients' ultimate dismay. Investment black holes are always there, but we do not know exactly where until we see other investors start to disappear into them.