Why buy and hold doesn't work anymore

Also, the markets being riskier/more volatile doesn't mean they're any less efficient. Efficiency is not the same as rationality. A market diverging from some alleged "rational" value as it swings way above and way below the "rational value" doesn't a priori mean the market isn't efficient.

I'm sure Lo knows all that, which it why it would be interesting to see what he actually said.

Inscrutably, Andrew Lo says that buy-and-holders are getting shellacked because they do not buy-and-hold. For example:

Yes, exactly! The example he gives for why buy and hold doesn't work has the investor bailing out, instead of buying and holding - and doing it at exactly the wrong time.

Which is one of the arguments for buy and hold! If it's your strategy, you don't do that - maybe you don't even know the market went down. Even better, you buy-hold-rebalance and take the opportunity to "buy low." That's low, not Lo, which I'm just not buying.

On the bright side, with another 6 months like the last 6 this genre of article/economist will fade from view, replaced by "Did you just miss that? The virtues of buy & hold." Remember when everyone was so freaked out by high frequency traders that they didn't notice that the US stock+bond market was at an all-time high? (as were the balanced index funds that track those markets)

-Tad

I'd written "For the 20 years ended Dec. 31, 2006, the average stock fund investor earned a paltry 4.3 average annual compounded return compared to 11.8 percent for the Standard & Poor?s 500 index" Taken from a report by Dalbar. In a perfect world, one would see that

I almost spewed my dinner-salad onto my keyboard when I read the above. :-)

You bet.

You oughta join the folks at the Wall Street Journal site commenting on Bodie's article. Ninety percent are Dapperdobbs-type (bona fide) hotshots with all wisdom.