Self-preservation is universal across all organisms. In the face of danger or pain, it is just in the nature of life to stop the pain and avoid the danger. Some organisms are more effective than others, and thus some species have been able to evolve and flourish more readily. Humans take self-preservation to another level and apply the concept to more than just oneself. We apply it to our friends and family members, strangers, our pets, and of course, to our investments.

As fortune would have it, we naturally associate losses with danger and the instinct is to Sell, Sell, Sell! Then, when returns turn positive, we become euphoric and our gut tells us to Buy, Buy, Buy! The following chart shows equity mutual fund cash inflows (in blue) alongside bond fund cash inflows. An overwhelming number of investors sold at the bottom, missed the rebound, and bought back in at more expensive levels.

Timing the market may appear to be a primordial result of the desire to self-preserve. Successful investing requires resisting these urges that may be quite adaptive in other avenues of behavior.