It came from a video by Big Think featuring Barry Ritholtz. He was going through a litany of things that stop investors from being successful and was clear that boring DCA investing in diverse securities pays better than managed funds 99.999% of the time at 20 years. In that conversation he mentioned that the old joke was that if you wanted to be successful you should put your money into the market and then do nothing. Like don’t move it, don’t change it, don’t mess with it. You are far more likely to mess things up by trading around than you would be if you bought an index fund and then just never sold it.
For what it’s worth, I’ve never learned this lesson and now that I’m getting to be older I might just have to try it…
Just heard what might be the best advice for investors: “don’t just do something! Sit there!”
byu/_Piratical_ ininvesting
Posted by _Piratical_
11 Comments
[Here’s the video if you wanted to check it out.](https://youtu.be/S-UqYUfvwss?si=kMgOiMLkKxytMm9H)
What you are referring to is commonly known as a boglehead. Someone who regularly puts money into index funds and doesn’t mess around with it. Buy and hold for a long time. It works great! Go to /r/bogleheads
OP, investing early and letting wealth accumulate works “fine”, but monthly contributions and risk management (especially during times of uncertainty and chaotic government actions) telling people to just sit there is rather silly.
This is exactly why I separate my portfolio. 90% is in the ‘Do Nothing’ pile (Index funds, never touch). The other 10% is my ‘Scratch the Itch’ pile for active trading.
If I didn’t have the 10% to play with, I know I would eventually get bored and sabotage the 90%. It’s a necessary evil for my psychology.
Boglehead investing is best for most people.
It’s a full time job managing a stock portfolio. Unlike an index, some stocks aren’t compounders at all. If you pick the wrong ones you can lose money. If you just buy and hold some stocks, the longer you hold the more money you lose. It’s very different from indexing where returns compound more the longer you hold.
If you don’t have time to research companies and manage your stocks, just buy SPY.
If you have been investing for a while. Look for your oldest statements. Look at the shares of companies and the quantities you owned previously. I often have clients do this. They cry when I explain what their old 2k of Apple stock would be worth today…
The hardest part is accepting that doing nothing is an active decision.
Most mistakes come from confusing motion with progress. The market already prices in far more information than any individual reaction can process in real time.
Sitting still feels irresponsible because it removes the illusion of control. In reality it is often the most disciplined strategy there is.
“After spending many years in Wall Street and after making and losing millions of dollars I want to tell you this: It never was my thinking that made the big money for me. It always was my sitting. Got that? My sitting tight!” -Jesse Livermore
Yeah this is painfully true. Most damage comes from people needing to feel busy. Check portfolio, tweak something, trade out of boredom. Sitting there feels wrong but it’s usually the right move. Hardest part is doing nothing when everyone else is panicking.
I don’t know who Barry Ritholtz is, but he’s just quoting Jack Bogle. In an interview, Jack said “…but the real answer is **don’t do something, just stand there.** In other words don’t get captivated by the emotions of the moment…”
Link to the Bogle interview:
[https://youtu.be/Tk1woz1OQrc?si=mOOxQTqFpkcDcVHh&t=285](https://youtu.be/Tk1woz1OQrc?si=mOOxQTqFpkcDcVHh&t=285)
I have the link going right before the quote, but the five minute clip is worth watching from the beginning.
That is why I only rebalance annually, and that is only rebalancing.