There’s an old saying that there’s no free lunch, but doing nothing over the last 20 years with your stock or bond investments was the blue-plate special. In its annual study of mutual fund investors, Dalbar found the average stock fund investor underperformed the S&P 500 by over 4%, and the average bond fund investor underperformed the Barclays Aggregate Bond index by over 5%.
Typical mutual fund investors own their funds for 3-4 years and then sell, repeating a cycle of underperformance. Sitting tight for 20 years was a much better strategy, even through the recessions in 2000 and 2008. So buy and hold is dead? It looks pretty good compared to buy and switch.