Buy and hold the S&P was the best option for most investors. Even so 85% of investors continued to underperform the S&P by 5% per year. Why? Either the investor or financial advisor thought they had a better idea or could time the market.

Lost opportunity cost is the difference in returns between two alternatives. Warren Buffet says if you are sane, you always choose the better of two options. With the advent of the Stars model lost opportunity cost is now the greatest risk that an investor faces. The reason is because it occurs year after year. It can not to be recovered after it occurs.

The reason the Stars model dramatically changes investing strategy is that the best version of Stars outperforms the S&P by 19 percentage points per year. That drives all decisions to buying the Stars model because nothing else can consistently beat Stars.

For the typical investor who is 5% per year below the S&P and Stars you have an average lost opportunity cost of 24 percentage points per year. In a typical 4 year cycle where you have 3 up years and one down year you have a total lost opportunity cost of 96%. The worst drawdown in Stars is 67% if the S&P is down 20% per year for two years (‘01-‘02). But drawdown is not a loss because you buy at lows not sell. But the 96% lost opportunity cost can not be recovered.

A Nobel prize in economics was awarded for the concept that an investor’s portfolio consists of two buckets – risk and non risk. The risk bucket is the same for every investor because the best is the best. The only decision an investor needs to make is his risk tolerance, how much risk he wants.

With the Stars model after a couple years the returns are so high that the accuracy is 100% because you always sell during rebalancing at a price above the purchase price. Since you never have a loss, your real risk is zero. The best version of the Stars buy and hold strategy is the best investment option.