the difference between buy-and-hold and dollar-weighted returns is even
larger. An investor who bought the Nasdaq index in 1973 and sold in
2002 would have earned an average yearly return of 9.6 percent. But the
typical investor in Nasdaq earned only 4.3 percent over this period.
This is true not just in the United States – the same thing occurred in
18 of 19 international markets that Mr. Dichev examined.
That’s Hal Varian, who argues that actively trading investors are excessively swayed by what is in the news, thus earning less than random returns. If you can’t restrain your trading, at least chuck your newspapers and magazines.