This paper examines whether investors are better off simply holding an S&P 500 portfolio without trading, even after stocks leave the index. It compares equal- and value-weighted portfolios, concentrated portfolios of the largest stocks, and randomly selected portfolios, showing that “doing nothing” often matches index performance while recent mega-cap leadership is less representative of long-term history.
Returns to “Do-Nothing” Portfolios
Hendrik Bessembinder
Research
27 Pages
Key Takeaways
Minimal trading: Value-weighted do-nothing portfolios returned 11.30% annually from 1971–2025, nearly matching the S&P 500's 11.20% annualized return.
Mega-cap anomaly: Investing only in the largest S&P 500 stock each year grew $1 into just $59 over 55 years versus $361 for all constituents.
Diversification wins: A randomly selected single-stock portfolio beat the S&P only 41.5% of the time over rolling 10-year periods.
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