This will be a short post, though I want to toss this question out to readers: what investment strategies do you know of that are simple, and work on average over the long-term?
Here are four (together with posts of mine on the topic):
RGA Investment Advisor 2Q20 Commentary: The Tale of Two Markets
RGA Investment Advisor commentary for the second quarter ended July 2020, titled, "The Tale of Two Markets." Q2 2020 hedge fund letters, conferences and more In our Q1 2019 commentary we expressed how “COVID-19 will kick off one of the most profound reshaping of our world any of us will see in our lifetime,” accompanied Read More
Buy and Hold Will Return — 2/15/2009 (what a time to write this)
3) The Permanent Portfolio
4) Bond Ladders
I chose these because they are simple. Average people without a lot of training could do them. There are other things that work, but aren’t necessarily simple, like value investing, momentum investing, low volatility investing, and a few other things that I will think of after I hit the “Publish” button.
That said, most people don’t need to work on investing. They need to work on cash management, and I have written a small fleet of articles there. Managing cash is simple, but it takes self-control, and that is what most people lack in their financial lives.
But for those that have gotten their cash under control, with a full buffer fund, the above strategies will help, and they aren’t hard.
Final note: I realize valuations are high now, so buy-and-hold is not as attractive as at other times. I realize that interest rates are low, so bond ladders aren’t so great, seemingly. Indexing may be overused. Most of the elements of the Permanent Portfolio look unappealing.
But what’s the alternative, and simple enough for average people to do? My answer is simple. If they can buy and hold, these strategies will pay off over time, and far better than those that panic when things get bad. There are few regularities in the markets more reliable than this.