That's a bold headline. And it's true, unless "It's all different this time." Which it never has been, ever, in the history of the stock market.

One of the great Achilles Heels of blind buy and hold investing is the reliance on “average return.” The S&P, since its inception in 1923, has returned just over 12% per year[1]. On average. As Lance Roberts points out, that number is of little relevance[2] if you don't have a 100-year investment timeline.

What about the bleak corridor of 2000 to 2009? During that span, the S&P returned an average of -1% per year[3]. And what if you stuck to your buy and hold guns just prior to retiring at the end of 2002? You endured a three-year stretch that offered returns of -9%,  -12%, and -22% to cap it off. How rosy would your retirement look if the last three years of your preparatory investing lopped 42% off the total you had managed to accrue all your life prior?

The knee-jerk reaction to this cautionary fright tale is “That’s all well and good, but nobody knows when those corrections are going to happen, so it’s best to just ride them out and hope for the best.”

That’s not true. The most accurate stock market predictor there is now says the S&P 500 will return -2.5%, on average, for the next 12 years[4]. The market is beyond overvalued. The most accurate, widest-scope version of Warren Buffett’s favorite valuation tool, which compares the total value of the stock market to GDP, says the market has never been more overvalued, never gripped by greater bubbled-out mania, than it is right now[5].

Everyone makes their own...

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