Buy-and-Hold Is Pretty Darn Good

Buy-and-hold investing comes in for a lot of criticism, but I want to present a measured defense of it. Of course, what matters is what you’re after. Buy-and-hold isn’t perfect, and you’ll certainly experience some pain. But by staying in the market, your returns can be good enough.

Let’s consider the fate of the world’s unluckiest investor — the person who went all in at the market’s 2007 peak. Within 18 months, they lost half their money. They didn’t even see a profit for nearly five years. (I’m using the S&P 500 Total Return Index.)

Now here we are, more than 11 years later and the S&P 500 Total Return Index is up about 130%. That’s every $1 becoming $2.30. That’s about 7.7% annualized. That’s something to keep in mind the next time you hear someone talk about how they “called the crisis.”

Posted by on January 24th, 2018 at 12:12 pm


The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.