Fidelity: Successful investors forget they have an account

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StoppedOut
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Fidelity: Successful investors forget they have an account

Post by StoppedOut »

That's the news from some research Fidelity did. They found that the individual investors who did the best were the ones who forgot they had an account.
But O'Shaughnessy relays one anecdote from an employee who recently joined his firm that really makes one's head spin.

O'Shaughnessy: "Fidelity had done a study as to which accounts had done the best at Fidelity. And what they found was..."

Ritholtz: "They were dead."

O'Shaughnessy: "...No, that's close though! They were the accounts of people who forgot they had an account at Fidelity."

There are numerous studies that explain why this happens. And they almost always come down to the fact that our minds work against us.

Because of our behavioral biases, we often find ourselves buying high and selling low.
More at link
staythecourse
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Re: Fidelity: Successful investors forget they have an acco

Post by staythecourse »

sounds amusing, but is a good reminder that staying the course is MORE important then asset allocation. Asset Allocation seems to get the deserved credit the last 20+ yrs., but at the expense of folks forgetting the stuff even MORE important: Saving, starting early, and staying the course.

It seems asset allocation is just plain sexier to talk about even in the passive management group.

Good luck.
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Re: Fidelity: Successful investors forget they have an acco

Post by Trevor »

staythecourse wrote:sounds amusing, but is a good reminder that staying the course is MORE important then asset allocation. Asset Allocation seems to get the deserved credit the last 20+ yrs., but at the expense of folks forgetting the stuff even MORE important: Saving, starting early, and staying the course.

It seems asset allocation is just plain sexier to talk about even in the passive management group.

Good luck.

Well put. The way I see it, asset allocation is a component of staying the course. Pick an allocation that is right for you and you will be able to sleep at night without second guessing yourself.


Really though, what better way to stay the course than forgetting about your investments? Time to go change my Vanguard password to random letters :P
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Re: Fidelity: Successful investors forget they have an acco

Post by brchump »

Seems like another study of (very) passive management vs. active management with the twist being that the investments were all in one company. The results however are the same!

On another note when did following your investment strategy and associated asset allocation of choice mean you were not "staying the course"?
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Re: Fidelity: Successful investors forget they have an acco

Post by nedsaid »

I have a brokerage IRA with an independent broker. I have worked with him for probably 17 years and I followed him from another firm. His comment was that his clients who left their portfolios alone did better than those who constantly tinkered. Other folks have made similar comments. Warren Buffett has said that as motion increases that returns decrease. John Bogle talks a lot about staying the course. Buy good stuff and keep it.
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Re: Fidelity: Successful investors forget they have an acco

Post by potatoman »

This is true of my mom's account. She had a small IRA in the mid 90s that was invested entirely in a biotech fund. Since the account was only worth a few k, she forgot about it until a year or so ago. It's now up over 800%.
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Re: Fidelity: Successful investors forget they have an acco

Post by grabiner »

This is why target-date funds are often recommended; they manage themselves. If you just put 10% of your salary plus a 5% employer match into your 401(k) in Vanguard Target Retirement 2050, and don't look at the account until you retire in 2050, you will probably have done very well through all the bull and bear markets. (If you did the same thing with Vanguard Total Stock Market, you would probably be OK, but you might have a problem if the market crashed in 2048-2049 just before you intended to retire.)
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Re: Fidelity: Successful investors forget they have an acco

Post by abyan »

"Dad's guy" ran my IRA into the ground the past 5 years, including last year's growth (on a 100% equity portfolio) of 1.75% (that was actually a "good" year).

My 403b that I totally forgot had been sitting at TIAA-CREFF the past 17 years grew 30% last year.

Oh, and mom decided to buy some IBM in the early 90s. Dad told her not to. Mom said "it's my money," and did it anyway. She kind of forgot about it. Her stock is now worth 15x what she invested.
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Re: Fidelity: Successful investors forget they have an acco

Post by sdsailing »

potatoman wrote:This is true of my mom's account. She had a small IRA in the mid 90s that was invested entirely in a biotech fund. Since the account was only worth a few k, she forgot about it until a year or so ago. It's now up over 800%.
Good thing it was biotech and not tech. Otherwise the opposite would have occurred !
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StoppedOut
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Re: Fidelity: Successful investors forget they have an acco

Post by StoppedOut »

Did anyone happen to go to the link an look at the graphic? I didn't want to post it here because of the comment. It's not offensive per se but I thought some might object to it. It's worth a look though. Information technology actually has one of the best 20 year annualized returns of the lot while the average individual investor barely does better than inflation.
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Re: Fidelity: Successful investors forget they have an acco

Post by Tanelorn »

If you forget your account, you aren't rebalancing (unless you've got a target retirement fund, which didn't exist 20 years ago). All the studies show stocks have outperformed everything else, so if you have some stocks and don't rebalance, you've got an increasingly aggressive AA. Would you be surprised that 100% stock investors outperformed the average investor over 20 years? Not at all, but they took a lot more risk too.
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Re: Fidelity: Successful investors forget they have an acco

Post by Silence Dogood »

Slightly off topic, but if you "forget" an account, is Fidelity (or any other investment company/bank) obligated to remind you?

Pretty sure I will never forget about an account but just wondering.
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Re: Fidelity: Successful investors forget they have an acco

Post by 555 »

abyan wrote:Oh, and mom decided to buy some IBM in the early 90s. Dad told her not to. Mom said "it's my money," and did it anyway. She kind of forgot about it. Her stock is now worth 15x what she invested.
How could you forget about it. You'd be getting dividends every year and have to report them on your taxes every year.
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Re: Fidelity: Successful investors forget they have an acco

Post by abyan »

It's a 403b, like a 401k or an IRA. You don't pay taxes until you take the money out. I'd get statements in the mail, but ignored them because it didn't have much money in it, so it never changed much. I finally realized I needed to do something with it, and that's when I discovers the 30% :-)
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Re: Fidelity: Successful investors forget they have an acco

Post by abyan »

Oh you mean mom's account. She knew she had the stock, but didn't handle the finances. My dad did that. She knew it was doing well, but like me with my 403b, kind of blew it off.
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Re: Fidelity: Successful investors forget they have an acco

Post by Nu2Invest »

This story sounds too good to be true. Even if it were true, the best accounts for fidelity are the ones that earn the company the best. Probably those high fee Target funds earn the company a lot of money, especially from the accounts of people who set their funds into a target fund from age 25 and don't ever look at their statements again.

On a related note, Fidelity doesn't ever mail statements in the mail or email any notification of statements, at least for my account. There's no option of getting paper statements either.
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Re: Fidelity: Successful investors forget they have an acco

Post by pkcrafter »

StoppedOut, thanks for the post. In the article you posted there was another link--this one.

Image

Now, having looked at the results of both charts, I have to say I'm somewhat skeptical. For instance, those in the accumulation phase contribute on a monthly basis and thus cannot capture all of the gains the market returns in any given year. And maybe the results aren't accounting for non-stock holdings. Of course, there is no doubt that behavior is a major factor in creating drag and inefficiency.





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Re: Fidelity: Successful investors forget they have an acco

Post by sperry8 »

pkcrafter wrote: Of course, there is no doubt that behavior is a major factor in creating drag and inefficiency.
Paul
No doubt it is in mine. I make very few trades, but the ones I do make always harm me.
Got out of REITS (VNQ) at the end of last year. Ugh. :oops:
Also made a call for myself of $37 to get back into Emerging via VWO. It got there - but I didn't pull the trigger (re-set the # to $35 which it never hit). Double Ugh. :oops:

Mostly I just let my money sit invested - that money does wonderfully well. I hope at some point these lessons sink in. :annoyed
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Re: Fidelity: Successful investors forget they have an acco

Post by BlueSkies »

StoppedOut wrote:Did anyone happen to go to the link an look at the graphic? I didn't want to post it here because of the comment. It's not offensive per se but I thought some might object to it. It's worth a look though. Information technology actually has one of the best 20 year annualized returns of the lot while the average individual investor barely does better than inflation.
Yes, I did. Surprising to me, as you said about the technology. I hope Health Care continues since I am buying some at Vanguard. Thanks for the link.
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Re: Fidelity: Successful investors forget they have an acco

Post by DonCamillo »

I'd like to use the Rip Van Winkle portfolio and sleep for 30 years. :moneybag

Unfortunately, I'm pretty sure that I don't have 30 years left. :(
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Re: Fidelity: Successful investors forget they have an acco

Post by CABob »

I've been a bit of a procrastinator on certain tasks. When it comes to investing, procrastination looks almost like stay the course or buy and hold. I haven't ever forgotten about an account, however. Don't confuse inactivity with forgetting.
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The Secret to Investing Success: Amnesia

Post by Steadfast »

"...Fidelity studied which customer investing accounts performed the best: They were the ones held by people who had forgotten they even had Fidelity accounts, and so did no buying or selling from them."

"...[It was] similar with families fighting over inherited assets. Because of extended court battles, in some cases, the accounts couldn't be touched for 10 or 20 years: No buying new investments or selling old ones. Those families subsequently found that the period of inactivity was the time when their investments performed best."

http://www.dailyfinance.com/2014/09/10/ ... de=2726183

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Re: Fidelity: Successful investors forget they have an acco

Post by LadyGeek »

^^^ FYI - I merged Steadfast's thread into here.
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Re: Fidelity: Successful investors forget they have an acco

Post by Dandy »

forgetting means the investors didn't panic during bad times (or re balance). Sounds reasonable since most tampering with your investments tend to be closet market timing or just basic fear/greed. Of course if someone hacked into your account and took some of your assets you would have liked to have remembered you had one.

I'm sure fidelity would like all investors to forget they had accounts so that their assets wouldn't drift to Vanguard. :happy
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Re: Fidelity: Successful investors forget they have an acco

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Re: Fidelity: Successful investors forget they have an acco

Post by RudyS »

Nu2Invest wrote:
On a related note, Fidelity doesn't ever mail statements in the mail or email any notification of statements, at least for my account. There's no option of getting paper statements either.
Gilbert & Sullivan: "What never? Well, hardly ever." My wife has an IRA at Fidelity, and a statement shows up in the mail each month.
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Re: Fidelity: Successful investors forget they have an account

Post by David Jay »

Just an update, for those who may find this thread by search or link. O’Shaughnessy was disclaimed this story, 2019 tweet here: https://twitter.com/jposhaughnessy/stat ... 25248?s=20
Last edited by David Jay on Fri Aug 21, 2020 10:09 pm, edited 1 time in total.
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Re: Fidelity: Successful investors forget they have an account

Post by dani_0407 »

Hi all,

I am not sure if everything is a little misleading or I am very confused.

My question. Suppose Investor A had 10000 Eur to invest in January 1988 in the S&P 500, in a fund with a TER of 0.07%. Investor A would have an Compound annual growth rate, until July 2020, of 10.66%. The very passive investor who died or forgot his account would have had this return, right?

Now suppose Investor B does not have much money to invest at once, and had to invest a small monthly amount (in the same fund as investor A), let say 200 Eur starting in January 1988, and continue investing the same quantity every month until July 2020; in this case I think the Compound annual growth rate would be 5.87% (reinvesting dividends, not taking transaction costs or taxes into consideration, and according to the backtest I am using).

Where is the problem then, that the average investor (probably being like investor B) saves small amounts monthly and is unable to get a higher annual return? I am very new to financials and have not much idea of anything, so sorry for my question, but I am really curious and want to understand what I am getting wrong. Why shall be Investor A considered, as in the thread title, more successful than Investor B?
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Re: Fidelity: Successful investors forget they have an account

Post by 000 »

dani_0407 wrote: Fri Aug 21, 2020 9:32 pm My question. Suppose Investor A had 10000 Eur to invest in January 1988 in the S&P 500, in a fund with a TER of 0.07%. Investor A would have an Compound annual growth rate, until July 2020, of 10.66%. The very passive investor who died or forgot his account would have had this return, right?
No, it would have been confiscated by the government.
dani_0407 wrote: Fri Aug 21, 2020 9:32 pm Now suppose Investor B does not have much money to invest at once, and had to invest a small monthly amount (in the same fund as investor A), let say 200 Eur starting in January 1988, and continue investing the same quantity every month until July 2020; in this case I think the Compound annual growth rate would be 5.87% (reinvesting dividends, not taking transaction costs or taxes into consideration, and according to the backtest I am using).

Where is the problem then, that the average investor (probably being like investor B) saves small amounts monthly and is unable to get a higher annual return? I am very new to financials and have not much idea of anything, so sorry for my question, but I am really curious and want to understand what I am getting wrong. Why shall be Investor A considered, as in the thread title, more successful than Investor B?
For one thing, investor A was able to put more in early and benefit from more years of investment returns. Also, we don't know what the specific returns will be until they happen.
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Re: Fidelity: Successful investors forget they have an account

Post by grabiner »

dani_0407 wrote: Fri Aug 21, 2020 9:32 pm Hi all,

I am not sure if everything is a little misleading or I am very confused.

My question. Suppose Investor A had 10000 Eur to invest in January 1988 in the S&P 500, in a fund with a TER of 0.07%. Investor A would have an Compound annual growth rate, until July 2020, of 10.66%. The very passive investor who died or forgot his account would have had this return, right?

Now suppose Investor B does not have much money to invest at once, and had to invest a small monthly amount (in the same fund as investor A), let say 200 Eur starting in January 1988, and continue investing the same quantity every month until July 2020; in this case I think the Compound annual growth rate would be 5.87% (reinvesting dividends, not taking transaction costs or taxes into consideration, and according to the backtest I am using).

Where is the problem then, that the average investor (probably being like investor B) saves small amounts monthly and is unable to get a higher annual return? I am very new to financials and have not much idea of anything, so sorry for my question, but I am really curious and want to understand what I am getting wrong. Why shall be Investor A considered, as in the thread title, more successful than Investor B?
The difference doesn't have to be in this direction; it depends on the starting point. What is going on is that every dollar invested has an annual growth rate between the time it was invested and now. Investor A got only the 32-year annual returns. Investor B got the 32-year returns on 1/32 of his money, and the 31-year returns on 1/32, and so on down to the 1-year returns on 1/32 of his money. And it happens that returns were higher earlier in the period, so Investor A came out ahead. (His advantage is less after inflation, as inflation was also higher.) If you choose a period which started with a bear market, such as 1929-1960, or 1966-1997, or possibly 2000-2031, then Investor B comes out ahead.
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Re: Fidelity: Successful investors forget they have an account

Post by David Jay »

dani_0407 wrote: Fri Aug 21, 2020 9:32 pm Hi all,

I am not sure if everything is a little misleading or I am very confused.

My question. Suppose Investor A had 10000 Eur to invest in January 1988 in the S&P 500, in a fund with a TER of 0.07%. Investor A would have an Compound annual growth rate, until July 2020, of 10.66%. The very passive investor who died or forgot his account would have had this return, right?

Now suppose Investor B does not have much money to invest at once, and had to invest a small monthly amount (in the same fund as investor A), let say 200 Eur starting in January 1988, and continue investing the same quantity every month until July 2020; in this case I think the Compound annual growth rate would be 5.87% (reinvesting dividends, not taking transaction costs or taxes into consideration, and according to the backtest I am using).

Where is the problem then, that the average investor (probably being like investor B) saves small amounts monthly and is unable to get a higher annual return? I am very new to financials and have not much idea of anything, so sorry for my question, but I am really curious and want to understand what I am getting wrong. Why shall be Investor A considered, as in the thread title, more successful than Investor B?
The reason why investor A is successful is that they leave all their money in the SP 500 fund (because they forgot about it).

Investor B in this scenario tries the SP 500 for a while, then decides that Emerging Markets is the place to be. Emerging Markets crash so investor B moves the funds to Small Cap Value. After 10 years of underperformance he decides that Large Cap Growth is the winning selection. COVID comes along and now investor B freaks out and thinks that Gold is looking like the safe bet. Next year he may invest in Tesla after it has peaked. And so on.

The losses by Investor B are due to behavioral issues, not math. As William Bernstein might say: “the enemy in the mirror”.

The story must now be considered mythical, but the principle of “staying the course” is still the takeaway.
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Re: Fidelity: Successful investors forget they have an account

Post by nisiprius »

The original poster read it in a story by reporter Myles Udland who heard it on a podcast from O'Shaughnessy who "relayed an anecdote" from an unnamed employee about a study at Fidelity. We don't even know if employee had actually seen the study or... just heard about it.

I call urban legend on this. Variations of this story have been circulating for a while but I have yet to see a link to the study or any evidence that it really exists or any serious details on what Fidelity found. It sounds like someone took an old chestnut of folk wisdom--one that I think has some truth to it, but, still, just a proverb or maxim, to the effect that you will do better if you avoid looking at your account very often. And then tried to add punch to it by particularizing it and claiming it was the result of an actual study.

On the other hand, Morningstar has actually numeric values for various funds showing the "fund return," the hypothetical returns that would have been obtained by staying the course, and "investor returns," the real-world dollar-weighted result of people buying and selling at the times when the actually bought and sold. It is, by the way, nowhere near as consistent as people sometimes say, though over 15 years investor returns are usually quite a bit lower than fund returns. Anyway, it is data.
Last edited by nisiprius on Fri Aug 21, 2020 10:33 pm, edited 2 times in total.
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Re: Fidelity: Successful investors forget they have an account

Post by MathIsMyWayr »

grabiner wrote: Fri Aug 21, 2020 10:07 pm
dani_0407 wrote: Fri Aug 21, 2020 9:32 pm Hi all,

I am not sure if everything is a little misleading or I am very confused.

My question. Suppose Investor A had 10000 Eur to invest in January 1988 in the S&P 500, in a fund with a TER of 0.07%. Investor A would have an Compound annual growth rate, until July 2020, of 10.66%. The very passive investor who died or forgot his account would have had this return, right?

Now suppose Investor B does not have much money to invest at once, and had to invest a small monthly amount (in the same fund as investor A), let say 200 Eur starting in January 1988, and continue investing the same quantity every month until July 2020; in this case I think the Compound annual growth rate would be 5.87% (reinvesting dividends, not taking transaction costs or taxes into consideration, and according to the backtest I am using).

Where is the problem then, that the average investor (probably being like investor B) saves small amounts monthly and is unable to get a higher annual return? I am very new to financials and have not much idea of anything, so sorry for my question, but I am really curious and want to understand what I am getting wrong. Why shall be Investor A considered, as in the thread title, more successful than Investor B?
The difference doesn't have to be in this direction; it depends on the starting point. What is going on is that every dollar invested has an annual growth rate between the time it was invested and now. Investor A got only the 32-year annual returns. Investor B got the 32-year returns on 1/32 of his money, and the 31-year returns on 1/32, and so on down to the 1-year returns on 1/32 of his money. And it happens that returns were higher earlier in the period, so Investor A came out ahead. (His advantage is less after inflation, as inflation was also higher.) If you choose a period which started with a bear market, such as 1929-1960, or 1966-1997, or possibly 2000-2031, then Investor B comes out ahead.
This is why "time the market" is critical. :wink:
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Re: Fidelity: Successful investors forget they have an account

Post by flaccidsteele »

This is why you always buy more in a bear market

The US market always recovers. Always. It’s never different this time

If diversification is a free lunch, buying during a bear market is a free dinner

Buy more during a bear and you come out roses. 100%

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Re: Fidelity: Successful investors forget they have an account

Post by FIREchief »

StoppedOut wrote: Fri Sep 05, 2014 6:39 pm That's the news from some research Fidelity did. They found that the individual investors who did the best were the ones who forgot they had an account.
But O'Shaughnessy relays one anecdote from an employee who recently joined his firm that really makes one's head spin.

O'Shaughnessy: "Fidelity had done a study as to which accounts had done the best at Fidelity. And what they found was..."

Ritholtz: "They were dead."

O'Shaughnessy: "...No, that's close though! They were the accounts of people who forgot they had an account at Fidelity."

There are numerous studies that explain why this happens. And they almost always come down to the fact that our minds work against us.

Because of our behavioral biases, we often find ourselves buying high and selling low.
More at link
This is silly. I'm not buying it. Does anybody have a link to this "study?"

Granted, buy and hold is the best long term strategy; but disciplined investors can do that without "forgetting" that they have holdings. :annoyed
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Re: Fidelity: Successful investors forget they have an acco

Post by statefan03 »

Browser wrote: Thu Sep 11, 2014 8:01 am Fama: "Your money is like soap - the more you handle it the less you have."
Good one. A couple others from Ben Graham.
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  • If you find yourself trading more than twice a year, or spending more than 1-2 hours per month looking at your investments, then something has gone wrong.
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Re: Fidelity: Successful investors forget they have an account

Post by nisiprius »

FIREchief wrote: Sat Aug 22, 2020 2:36 am...This is silly. I'm not buying it. Does anybody have a link to this "study?" ...
I think it's a fable. In fact, I think this exchange is telling:
O'Shaughnessy: "Fidelity had done a study as to which accounts had done the best at Fidelity. And what they found was..."

Ritholtz: "They were dead."

O'Shaughnessy: "...No, that's close though! They were the accounts of people who forgot they had an account at Fidelity."
My surmise is that Ritholtz wasn't guessing. He'd heard the story before. His answer was a "yeah, sure, heard that one." But he'd heard a different version of the story.

It has to be an urban legend. "So this couple was necking when they heard on the radio to be on the alert for an escaped mental patient with a hook for a hand, and--" "Oh, yeah, in Pennsylvania." "No, in Texas. But anyway, when they got home they found a hook hanging from the car handle..."

The Fidelity clients sometimes were "dead" and sometimes "just forgot about their accounts."

How would Fidelity determine the cause of a low-activity account? What was their criterion? Why did they do the "study?" Were these accounts that were about to be turned over to the state for inactivity?

There's a very important investing question here that I've wondered about for decades and am no closer to the answer. (Some) Bogleheads believe in owning the whole market and staying the course.

Most investors believe in concentrating on individual stocks or parts of the market that they think will outperform the market, and shifting around from one to another on a time scale or rhythm of six months to a couple of years, based on low-bandwidth indirect syntheses they've read about or heard from others, usually based on recency.

For example, right now, many investors feel a compelling need to do something about tech. They're divided as to whether the right thing is to buy more or dump what they have, but what they feel in common is that now is not a time to be passive about tech.

Morningstar tells us that investors in the Fidelity Select Technology Profile (FSPTX) have underperformed the "fund return," the hypothetical performance of a buy-and-hold investor, over all time periods shown. Over fifteen years, the buy-and-hold investor would have been ahead by an average of over 1% per year.

Source

Image

As nearly as I can tell, nobody really knows how to interpret this. The big question to my mind is whether it means that "dumb money" truly underperforms, or whether it merely incurs unrewarded risk. The unrewarded risk would be extra, unnecessary, unrewarded fluctuations do to random successive good and bad active guesses.

True underperformance would be very interesting, and immediately raises the question of whether "the public" actually has the secret of reverse market timing, and whether this can be turned into a formula for beating the market by contrarian investing.

Or, whether systematic underperformance can happen in a way that cannot be exploited for gain by others.

My feeling is that true contrarianism is not trying to move in the opposite direction of "the public." My feeling is that "staying the course" is true contrarianism, because it is staying the course that most investors do not do.

So, once upon a time, there was a study--this is absolutely true, I swear, I heard it from someone who said his wife had a friend who was a graduate student at Purdue--or was it Penn? no, Purdue--who knew the professor that did it...
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MathIsMyWayr
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Re: Fidelity: Successful investors forget they have an account

Post by MathIsMyWayr »

What is the difference between "forget" and "don't peek"?
“One of the nicest (letters I’ve had) was from an airline pilot who had retired. My advice to investors is just to throw their 401(k) statements into the wastebasket. Don’t peek. Open the envelope when you retire and have a cardiologist standing by, because you’re going to be totally amazed. “Dear Mr. Bogle,” this pilot wrote me. “I peeked. And all I want to do is thank you.”
burritoLover
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Re: Fidelity: Successful investors forget they have an account

Post by burritoLover »

Meh - how many here are actually "buy and hold" investors anyway? Seems like everyone is constantly tweaking something here. Reducing international exposure cause its been a poor-performer. Getting out of small-cap value tilts after 5 years cause its been terrible. Increasing tech exposure. Moving from permanent portfolio, to all-weather, to whatever the latest fad is and then tweaking it to their liking. Increasing gold allocation. Decreasing bond allocation because future returns are lower. Blah blah blah.

Whether these specific Fidelty investors forgot about their accounts or whatever is not relevant. The relevant part is if they were invested in low-cost index funds, they are probably doing vastly better than almost all of the constant portfolio tweakers on this forum.
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Re: Fidelity: Successful investors forget they have an account

Post by livesoft »

FIREchief wrote: Sat Aug 22, 2020 2:36 amThis is silly. I'm not buying it. Does anybody have a link to this "study?"
This has all been debunked on Bogleheads.org numerous times. Fidelity was asked about the story and there was no Fidelity study. It is all urban myth. See also this NYTimes article when Fidelity was asked about the study.
https://www.nytimes.com/2016/08/06/your ... rkets.html
Fidelity, which has received inquiries about the study ever since, without knowing why, told me this week that it had never produced such a study.
Internet search engines are pretty good at finding the extent of the myth, too:
https://lmgtfy.com/?q=fidelity+dead+investors+study&s=d

Carry on ... until next time.
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MathIsMyWayr
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Re: Fidelity: Successful investors forget they have an account

Post by MathIsMyWayr »

livesoft wrote: Sat Aug 22, 2020 8:43 am
FIREchief wrote: Sat Aug 22, 2020 2:36 amThis is silly. I'm not buying it. Does anybody have a link to this "study?"
This has all been debunked on Bogleheads.org numerous times. Fidelity was asked about the story and there was no Fidelity study. It is all urban myth. See also this NYTimes article when Fidelity was asked about the study.
https://www.nytimes.com/2016/08/06/your ... rkets.html
Fidelity, which has received inquiries about the study ever since, without knowing why, told me this week that it had never produced such a study.
Internet search engines are pretty good at finding the extent of the myth, too:
https://lmgtfy.com/?q=fidelity+dead+investors+study&s=d

Carry on ... until next time.
Did George Washington cut down a cherry tree? Does it matter whether it is a true story or all urban myth? Did an apple fall on Issac Newton's head?
livesoft
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Re: Fidelity: Successful investors forget they have an account

Post by livesoft »

MathIsMyWayr wrote: Sat Aug 22, 2020 9:18 amDid an apple fall on Issac Newton's head?
Don't know, but there is an old of sufficient age apple tree right where he could sit.
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Re: Fidelity: Successful investors forget they have an account

Post by grabiner »

burritoLover wrote: Sat Aug 22, 2020 7:20 am Meh - how many here are actually "buy and hold" investors anyway? Seems like everyone is constantly tweaking something here. Reducing international exposure cause its been a poor-performer. Getting out of small-cap value tilts after 5 years cause its been terrible. Increasing tech exposure. Moving from permanent portfolio, to all-weather, to whatever the latest fad is and then tweaking it to their liking. Increasing gold allocation. Decreasing bond allocation because future returns are lower. Blah blah blah.
While posters doing this lead to a lot of discussions, the forum also has plenty of posters who have chosen a strategy and stuck with it, whether this is strict buy-and-hold or not. My own investment strategy is essentially the same as in 2002 (after my first bear market, when I had a better idea of my risk tolerance).

I don't hold the same funds as in 2002, because the investment options have changed, but I still have the same overweight to value in my US stock holdings. And my stock/bond allocation has changed as my risk tolerance changed, with a home purchase in 2013 and retirement getting one year closer every year; my target allocation within stocks does not change.

And proper rebalancing (unless you have 100% stock or use a target-date fund) is the one exception to buy-and-hold which is generally beneficial. I sold bonds to buy stock in October 2008 and in March 2020; my risk tolerance hadn't changed, but the market had changed my portfolio to have too much in bonds.
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Re: Fidelity: Successful investors forget they have an account

Post by burritoLover »

grabiner wrote: Sat Aug 22, 2020 10:11 am
burritoLover wrote: Sat Aug 22, 2020 7:20 am Meh - how many here are actually "buy and hold" investors anyway? Seems like everyone is constantly tweaking something here. Reducing international exposure cause its been a poor-performer. Getting out of small-cap value tilts after 5 years cause its been terrible. Increasing tech exposure. Moving from permanent portfolio, to all-weather, to whatever the latest fad is and then tweaking it to their liking. Increasing gold allocation. Decreasing bond allocation because future returns are lower. Blah blah blah.
While posters doing this lead to a lot of discussions, the forum also has plenty of posters who have chosen a strategy and stuck with it, whether this is strict buy-and-hold or not. My own investment strategy is essentially the same as in 2002 (after my first bear market, when I had a better idea of my risk tolerance).

I don't hold the same funds as in 2002, because the investment options have changed, but I still have the same overweight to value in my US stock holdings. And my stock/bond allocation has changed as my risk tolerance changed, with a home purchase in 2013 and retirement getting one year closer every year; my target allocation within stocks does not change.

And proper rebalancing (unless you have 100% stock or use a target-date fund) is the one exception to buy-and-hold which is generally beneficial. I sold bonds to buy stock in October 2008 and in March 2020; my risk tolerance hadn't changed, but the market had changed my portfolio to have too much in bonds.
Perhaps there just isn't a lot to talk about when you stick to an investment strategy over the long-term so the tweakers just become more the vocal majority.
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Re: Fidelity: Successful investors forget they have an account

Post by bryanm »

Counterpoint: people who forget they have an account have their assets escheated and liquidated by the state. Not good for growth!

viewtopic.php?t=301995
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Re: Fidelity: Successful investors forget they have an account

Post by FIREchief »

burritoLover wrote: Sat Aug 22, 2020 7:20 am Meh - how many here are actually "buy and hold" investors anyway?
Very likely the silent majority. I haven't "tweeked" my investment strategy for years. 100% TIPS for fixed and 100% US TMI for equities. I have no reason to change anything. Simplicity can be a very good thing. 8-)
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Re: Fidelity: Successful investors forget they have an account

Post by David Jay »

Well, at least now we know how many people read the first post of a thread and immediately comment :D

(Note the 3 1/2 year break in the thread, followed by my update that the guy quoted in the article linked in the head post has denied the story)
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Re: Fidelity: Successful investors forget they have an account

Post by nisiprius »

David Jay wrote: Sat Aug 22, 2020 11:47 am Well, at least now we know how many people read the first post of a thread and immediately comment :D

(Note the 3 1/2 year break in the thread, followed by my update that the guy quoted in the article linked in the head post has denied the story)
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Re: Fidelity: Successful investors forget they have an account

Post by telemark »

My own experience does not match this. I went for over a decade never looking at my 401K, because you had to make an appointment to see the plan advisor and I was always busy (software development is like that). Eventually I started learning about index funds and wanted to see what I currently had, and I *should* have had a cardiologist standing by, because I couldn't believe how little there was.

It was a bad, expensive plan and I wasn't putting enough money in it :(
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