Financial advisors desire to avoid drawdown. Peter Lynch points out that 10% corrections occur every 2 years and 25% corrections occur every 6 years. He goes on to say if the investor can’t handle this, they should not own equities.

Great wealth is made by buy and hold strategies yet the average investor holding period is only 6 months. Why is this the case? Either the investor or advisor is recommending the buying and selling. One or the other think they have a better idea. Results say on average they don’t.

Over the past 10 years the 15 largest investment holdings underperform the S&P by 10 percentage points per year. Over the same period only about 30% of the stocks outperformed the S&P. Therefore frequent changes in stock holdings produces underperformance.

Financial advisors are recommending frequent changes instead of buy and hold and appear to be recommending value type purchases. The S&P is doing the exact opposite. The S&P is incrementally buying what is rising and incrementally selling what is falling.

Financial advisors recommend diversification. Bonds underperform the S&P by 7 percentage points per year. Value investing underperforms the S&P by 10 percentage points per year. Very few investments of any kind outperform the S&P.

The Stars buy and hold strategy that uses two cap weighted ETFs outperforms the S&P over the past 26 years by a factor of 17! Better performance is possible and the financial services industry should provide these options.

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