“Buy and Hold” No More
Article

“Buy and Hold” No More

The Resurgence of Active Trading

A16Z, 2021

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7

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Recommendation

Famed investor Warren Buffett advises people to “only buy something that you’d be perfectly happy to hold if the market shut down for 10 years.” That sentiment accurately describes the sharp rise in passive investing since the Great Recession. But changing demographics and investor behavior are signaling a shift back to active trading. Financial professionals Anish Acharya and Matthieu Hafemeister’s savvy report will appeal to traders and investors of all generations.

Summary

Capital in passive investing funds exceeds dollars in actively managed offerings, but active investing is coming back.

In 1976, Vanguard CEO Jack Bogle pioneered passive investing with the Vanguard 500 Index fund, designed to capture the returns of S&P 500 equities in a single fund. The concept was simple: Beating the overall market year over year is extremely difficult, and investors are better served by leaving their money to work over time than by betting on active strategies to outperform.

In September 2019, total dollars in passive vehicles first exceeded the amount in actively...

About the Authors

Anish Acharya is a general partner and Matthieu Hafemeister is a partner at Andreessen Horowitz.


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