Most of us are hard-wired for action. Life is busy, and we're taught to tackle goals, optimize our time, and check items off our to-do lists. In most areas, our drive to stay busy is an advantage. But when it comes to investing, constant action is often detrimental to returns.
Let’s start with an unconventional lesson from a study conducted by economist Ofer H. Azar of Ben-Gurion University in Israel. In 2007, Azar analyzed 300 penalty kicks in professional soccer. For goalkeepers, this is as high-stakes as it gets; they have a split second to decide how to save the shot. However, Azar found that when goalkeepers simply stood in the center and waited to see the ball's trajectory, they succeeded in blocking about one in three penalty kicks. That success rate was significantly higher than if they dove left (14%) or right (12.6%).
Yet most goalkeepers keep diving. Why? Social pressures. If they stand still and miss, they worry they’ll look like they’re not trying, even if standing still gives them a better chance. This compulsion to “do something” — even if it’s unproductive — is deeply human.
The Cost of Needless Investment Activity
Just as goalkeepers feel compelled to act, many investors, from DIY traders to seasoned professionals, find themselves itching to do something with their portfolios. Market volatility, media noise, and economic predictions tempt us to buy, sell, or rebalance. But data shows that such frequent trading is often a recipe for underperformance.
The investment industry itself adds fuel to this fire. Many funds and advisers operate under a fee structure that encourages frequent trading, s. Over-trading brings transaction costs and tax consequences that eat into profits, often at the investor’s expense.
Investing Based on Evidence, Not Impulses
For individual investors, the temptation to trade on news headlines or economic predictions is strong. The average holding period for a U.S. stock is now just six months, far shorter than the time needed to realize the full benefit of long-term, evidence-based strategies. Chasing short-term returns drives up transaction costs and short-circuits the compounding process, which is the key to real wealth accumulation.
This doesn't mean “set it and forget it” for every investor, though. Investors with complex portfolios, particularly high-net-worth households, can benefit from personalized, evidence-based strategies that account for their specific goals, tax situation, and financial needs. Rather than focusing on short term fluctuations in the market, these portfolios should be centered on what matters to the household.
Why Doing Nothing Can Be the Most Powerful Strategy
Investing is a marathon, not a sprint, and the portfolio management process benefits from this type of mindset. Once you’ve created a well-designed portfolio based on sound principles, there’s usually little reason to make frequent changes. Historical data shows that broad, diversified exposure to the market, paired with minimal trading and low fees, is the most efficient way to build wealth.
That’s why we at WealthFactor embrace a long-term, disciplined investment approach for our clients. With a focus on tax-efficient strategies and cost-effective indexing, we build custom portfolios designed to minimize costs, mitigate risk, and maximize after-tax returns. Our goal is not to trade often but to invest intelligently — for you and your unique situation.
Jack Bogle, founder of Vanguard and a pioneer of index investing, wisely advised, “Don’t just do something. Stand there.” At WealthFactor, we believe in the power of disciplined inaction. With the right strategy in place, standing firm against the temptation to “do something” is often the best move for your wealth and your peace of mind.
At WealthFactor, we understand the value of disciplined patience in investing. Our approach centers on creating customized, evidence-based portfolios that prioritize long-term growth while minimizing unnecessary costs and risks. We believe that doing less can often mean gaining more when it comes to building wealth. If you’re interested in learning how a thoughtful, ‘do-no-harm’ strategy can support your financial goals, schedule a conversation with us today — let’s discuss how standing firm can make a meaningful impact on your wealth over time.
