Everyone knows that great wealth has been made by long term buy and hold strategies. Most long term investors hold either the S&P or target date funds. Jack Bogel pointed out 40 years ago that the average investor can’t beat the S&P so they should just own it. Recently Warren Buffet advised that investors should own 90% S&P and 10% cash.

Target date funds usually own 60% S&P and 40% bonds. For 40 years bonds performed well as interest rates fell from 15% to 1%. The last 5 years interest rates have risen and bond investments have suffered. In this environment of concern about higher interest rates investors have searched for better returns. I think this is a major reason for shorter holding periods in portfolios.

For a trading approach a new stock or fund needs to be picked about every 6 months because the average holding period is 6 months. The odds of picking one that is better than the S&P over the next year is only about 30%. The other stocks remain in the portfolio for long periods of time resulting in poor portfolio performance. People usually pick stocks that have fallen in price. Since no one can pick bottoms, these stocks are often poor performers for some time.

Picking individual stocks or funds for long term investing strategies is no easier. Very few instruments are things you want to hold for 6 years or longer. Many choose last years best performers. This seldom works very well. My preference is cap weighted ETFs. Good ones can be held forever. I believe SPY and TQQQ are the best. They always own a high concentration of the best stocks. They automatically change what they own as the leadership changes.