Why Investors Fail?

There is a nice post on The Big Picture blog telling why investors underperform the market.

Why Investors Fail
The Big Picture
June 12, 2005 08:40 PM

"Individuals have historically underperformed the markets, earning just 2.6% vs. the S&P 500 gain of 12.2% between 1984 and the end of 2002. Research in the U.S. has shown that this dramatic underperformance comes as a direct result of client behaviour, or more specifically, the attempt to avoid bad performance while seeking out better returns."

What's the cause of this underperformance? Assuming there is an appropriate asset allocation plan in place (Diversification in styles, geography, managers, and appropriate weightings for each security), what is the dominant problem for most investors?
In a word, EMOTION.

Read further:
The Big Picture: Why Investors Fail