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Being a Buy and Hold investor is like living through a nightmare where you find yourself the main character of the Greek “Myth of Sisyphus."
Futile and Hopeless Labor: In this myth, Sisyphus is condemned by the god Zeus to an eternity of futile and hopeless labor. He must roll a heavy stone to the top of a mountain. But then the stone rolls all the way back down … and Sisyphus has to push the stone back up again to the top.
A sentence of “futile and hopeless labor" is similar to the situation that Buy and Hold investors have faced during many periods of stock market history. Since “Bull" Markets are inevitably followed by “Bear" Markets, the investor’s hard-won gains from the Bull Market up-cycle evaporate as market prices fall during the Bear Market down-cycle.
That’s not to say the stock market hasn’t gone up over time. Looked at over hundreds of years, the market has grown at a 7% average growth rate. You might say: What’s the matter with 7%? The problem is that in order to have a statistically high probability of achieving an average growth rate that high, you should expect a potential wait of as long as 20 to 40 years! Read more...