Carla Fried: What every buy-and-hold investor must do right now

Carla Fried, on

Published in Business News

If you long ago adopted a buy-and-hold strategy, you did your retirement the biggest of favors.

In the 20 years through 2020, $10,000 invested in the S&P 500 stock index grew to more than $42,000.

Aspiring market-timers beware: If the 10 best days for the index are subtracted — just 10 days out of 20 years of trading — the $10,000 doesn’t even double. Remove the 20 best days and the $10,000 was worth just shy of $11,500.

Not buy-and-forget

As smart as it is to take a patient, long-term perspective that doesn’t try to time market swings, buy-and-hold investors might be taking on too much risk right now.

If you haven’t checked your overall mix of stocks and bonds, chances are you currently have more riding on stocks than you intended. That’s because stocks have been on a crazy-strong rally, and bonds have been plodding along, as designed.


For example, let’s say that your goal is to have 60% invested in stocks and 40% in a core U.S. bond fund. If you started with 60/40 a year ago, in late September that mix had shifted to 68% stocks and 32% bonds.

If you haven’t touched a thing for five years, a 60/40 mix is now around 75% stocks and 25% bonds.

A portfolio that 10 years ago started with a 60/40 mix would now be 85% invested in stocks and 15% in bonds, as during that stretch U.S. stocks gained more than 375% and core bonds gained 34%.

Time to correct portfolio drift


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