The best thing you can do to your portfolio today is to do nothing



A 2007 Israeli study of 286 penalty kicks in top leagues and championships worldwide has shown that the probability distribution of the penalty being shot down the middle is almost equivalent to the penalty being shot on left or right. Hence, if the keeper has a 33 percent chance of saving the penalty if he stays still. If he moves to left or right, the probability of him saving the penalty drops to 13 or 14 percent.


Simply put, the best thing that the goalkeeper should do in a penalty kick is simply to stay still.


Yet, statistics has shown that goalkeepers only stay in the centre 6% of the time.


Staying still in the middle is the simplest thing to do which reaps the most benefits yet most goalkeepers still choose to do something.


That's actually the same with investors.


Historically, it has shown that doing nothing almost always give you a key advantage. Most hedge funds have difficulties beating S&P 500. Only 3 hedge funds outperformed S&P 500 in 2021. Despite making frequent trades, most hedge funds still struggle to outperform an index benchmark.


If you were to look at different trading strategies, buy-and-hold strategy is still your best bet when it comes to investing for the long term. A Redditor backtest 40 years of data and find that simple DCA-ing with a buy-and-hold mentality still provide you with the best results.


It has been proven doing nothing (or probably minimal things) often reap the most benefits. If you have already decided what's your ideal asset allocation based on your risk appetite, there are very few things you need to actually do. You probably just need to DCA an amount based on a certain time interval which you have determined or revisit your asset allocation annually to reaffirm your decision. That's all. There's almost nothing else you need to do.


That's also probably why it's the hardest.


As humans, we have a certain bias for actions. We almost always think that we need to do something. If the market is doing well, we will want to increase our holdings so as to maximise our gains. If the market is not doing so well, we will want to decrease our holdings so as to avoid crashes. No matter what the situation is, we always want to do something. We almost always have an unfounded confidence that our actions are better than inaction. But very often, we end up much worse in our situations as compared to doing nothing.


Amid all the volatilities we are seeing in the market today due to the geopolitical tensions, please do remember that doing nothing is probably the best thing that we can do today. Fact of the day: Despite having two world wars and a Great Depression, Dow Jones still climbed from 66 to 11,497 in the 20th century.


Take your eyes from the screens and go spend time with your family.


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