To their credit many financial advisors say one of the greatest risks is being too conservative in investment choices. The best way to minimize lost opportunity costs is to get rid of underperforming investments. In particular when bond yields are 13 percentage points below the S&P you shouldn’t have bonds. Value stocks fall in the same category because they are typically 10% below the S&P.

Every year you should sell the worst 10% of your portfolio and replace it with an S&P ETF or better choice. Your worst investment is probably 30% below the market performance. After several years your worst investment may be less than 10% below the S&P. At that point there is not much of an incentive to sell and replace.

There are few investments that outperform the S&P by more than 2 percentage points per year for extended periods. The Stars buy and hold strategy which uses TQQQ and rebalancing to have outperformance of twice the S&P produces a lost opportunity cost of 13 percentage points over the past 26 years and 19 percentage points over the past 15 years.

In a market cycle of 5 years the total lost opportunity cost can be 20% per year or more depending on your performance. In that 5 years you will have a lost opportunity cost of 100% which can never be recovered. Drawdown on the other hand produces no loss for a buy and hold strategy.