Every once in a while I cite the DALBAR studies, or other indicators and reports that can serve as reminders that each of us is his own worst enemy in the market — and there was another such release of data this week. Vanguard looked at the small subset of its investors who were active and went to cash early this year during the panic, comparing them to those who stayed the course. As of late March, of course, those who went to cash did better, with more than half of them outperforming their “didn’t panic” counterparts… but by a couple months later, in May, 84% of the people who never went to cash were doing better than the “panic sell” crowd.

And probably that number would be higher now, with the market continuing to soar after May. And this is Vanguard, so we’re not talking about Robinhood yahoos daytrading on Youtube, this is folks who’ve had accounts for a decade and are in their 50s, on average (and there is probably no more “buy and hold” focused investor group than Vanguard fundholders, in general… other, perhaps, then Berkshire Hathaway shareholders).

Nobody likes to be thought of as “in a panic,” so that’s probably the wrong word — it judges those who sold. If we just call them “active investors who react to macro market moves”, it’s more obvious — the more active you are in getting in and out of the market for (presumably) big-picture reasons, the more likely you are to have disappointing returns relative to your friends and neighbors who just buy and hold. That’s because every decision begets another decision, and even if you were absolutely right in selling during the February/March downturn because things were obviously going to get ugly… that probably then meant you were going to be wrong because you would have been reveling in the losses you avoided, happily looking at your still-solid pile of cash, and you would have missed the next “right” call, which was to buy back in anywhere near the bottom in late March or April.

Or, at least, this small subset of investors tells us that the odds are at least 84% that you would have missed the “buy back in” decision. Maybe you’re in that 16% who did better, you’re above average, and you are consistently good at timing broad market moves… if that’s ...