The 2020 stock market, despite a deep but short correction in March, delivered above average returns for investors that year. Which brings up the point that most investors in 2020 didn’t get the full market return. 

Some moved to cash or bonds near the bottom in March, only getting back in well after the July recovery. Some simply juggled losses to the point they missed out when market segments suddenly recovered. Some backed out of investing altogether and simply sat it out. Others, after seeing the recovery thought it was too expensive to reinvest in early 2021. 

Or they reinvested just in time for the bear market of 2022, many jumping out and sitting on cash just prior to the recovery in the first half of 2023. An acquaintance of mine has jumped in and out of the market so many times over the last three years, he simply has no realistic idea what his gains and losses might actually be. 

If there was ever a time period that concisely illustrated Jack Bogle’s dictum of “Stay the Course”, this was it. 

You don’t have to have roller coaster years to miss returns. A few years ago, Fidelity did research on their own investors and found that most investors didn’t achieve the full return of their portfolios, in down years and good years alike. Across short and long time periods they generally returned about 30% of what their portfolio was capable of delivering. They wondered why is it that a person invested in one of their mutual funds that returned 10% averaged over a decade actually got about 3%. They also wondered why just a few of their investors did get the full return. Did they have some secret sauce that the others didn’t?

The results surprised them. The investors most likely to get the full return of their portfolio?

The dead. 

That’s right, deceased persons with a still active account did better than living persons when it came to getting the most out of their money. Simply put, dead people don’t react to news cycles, market reports, hot tips or self-doubt. Their money just sits there in the market invested however it was before its owner passed. Their money rode out downturns, bubbles, elections and disasters where the living found it necessary to twist the dials and fidget their way out of growth, alleviating perceived short-term pain at the expense of long-term gain.

And as a result, the dead are significantly better investors than the living who like to tinker with their accounts far more frequently than they should. That’s true in every year, and that was especially true in the last few years.

It also neatly illustrates Bogle’s second dictum, “Don’t do something, just sit there.”

The U.S. Stock market has returned something on the order of 10% annually over the last century. Certainly not every year, some were far worse and many far better. But if you’d invested a small sum, say $200, in the S&P500 a hundred years ago and simply forgot about it- through two World Wars, the Great Depression, Vietnam, the Cold War, the Oil Crisis, 9/11, the Great Recession, Covid-19, and a whole host of other reasons to take your money and run…you (or more likely your heirs) would be fabulously wealthy with an account of $4.5 million.