"BUY AND HOLD IS DEAD"
- Thread starter AFJ Garner
- Start date
Consider Buy and Hold a little more carefully. Consider asset allocation. Consider re-balancing. Consider dividend flow. Times are indeed tough but it is not all down to Buy and Hold. With the right mix of assets the strategy can be a perfectly viable one.
The majority of fund managers (mutual or pension fund managers) do NOT buy and hold. They waste your money and mine by stock picking and conducting expensive and useless research. Research over the years has shown that professional fund management is an expensive waste of time and money - at least if such people DID buy and hold, they would perform in line with the market (or just below it after costs) rather than way below the market.
The other party responsible for your late retirement is probably "big government" and its ludicrously high tax rates which prevent you from saving. Hundreds of thousands of useless clerks shuffling paper in countless government and quasi government offices, forcing up tax rates and spending tax payersâ money on useless schemes and cruel wars in far off countries.
And as for trading â does that beat buy and hold? Well, if the estimates of an 95% failure rate are anywhere near accurate, then that is not the ideal path for the great unwashed to follow.
It is amusing to look at the blather of the countless salesmen and brokers out there selling dreams and sucking wannabe traders dry.
Most are destined to screw up trading. For the vast majority, buy and hold will make them rich by comparison. Pointless pointing that out to the slick systems salesmen of course.
The majority of fund managers (mutual or pension fund managers) do NOT buy and hold. They waste your money and mine by stock picking and conducting expensive and useless research. Research over the years has shown that professional fund management is an expensive waste of time and money - at least if such people DID buy and hold, they would perform in line with the market (or just below it after costs) rather than way below the market.
The other party responsible for your late retirement is probably "big government" and its ludicrously high tax rates which prevent you from saving. Hundreds of thousands of useless clerks shuffling paper in countless government and quasi government offices, forcing up tax rates and spending tax payersâ money on useless schemes and cruel wars in far off countries.
And as for trading â does that beat buy and hold? Well, if the estimates of an 95% failure rate are anywhere near accurate, then that is not the ideal path for the great unwashed to follow.
It is amusing to look at the blather of the countless salesmen and brokers out there selling dreams and sucking wannabe traders dry.
Most are destined to screw up trading. For the vast majority, buy and hold will make them rich by comparison. Pointless pointing that out to the slick systems salesmen of course.
Why are you quoting a site with a lot of ancient articles (1997? Please!!!). Market timing generally seriously underperforms buy and hold longterm, and you have a lot more trading costs.
Funnily enough, I saw that quote on the salesman's website only yesterday. I believe he uses some sort of automatic rotation system for headline quotes so that the website appears fresh every day.
My own trend following has been profitable and successful. But then I use the leverage of the futures markets and do not rely simply on stock indices. And of course dealing costs are minimal.
I would agree however that Buy and Hold is a perfectly reasonable strategy to follow and find views like that expressed on the website in question uninformed ( to put it at its most charitable!).
I agree with riskfreetrading.
Actually I believe the maximum drawdown from the peak in 2007 to the recent trough was more like 50% for the S&P and 80% for some exotic markets.
They will however recover (or most of them will) if trade and life as we know it continues. The point I have been trying to make is that overall while a simple system can indeed prevent you on many occasions from experiencing a 50% decline in your account value, over the course of the market cycle the absolute CAGR for B&H will be very similar to that of a timing system.
However, a system can make for an easier ride. It will have you out during the bad times and back in again when things start to improve. In the longer term it may however not make much difference to your investment returns.
Again, I repeat that Buy and Hold is a viable system of investment. Congratulations on your success in the markets however - you are clearly one of the few winners in the recent market crash.
I am certainly not saying it can not be done. I am saying that most can not do it.
They will however recover (or most of them will) if trade and life as we know it continues. The point I have been trying to make is that overall while a simple system can indeed prevent you on many occasions from experiencing a 50% decline in your account value, over the course of the market cycle the absolute CAGR for B&H will be very similar to that of a timing system.
However, a system can make for an easier ride. It will have you out during the bad times and back in again when things start to improve. In the longer term it may however not make much difference to your investment returns.
Again, I repeat that Buy and Hold is a viable system of investment. Congratulations on your success in the markets however - you are clearly one of the few winners in the recent market crash.
I am certainly not saying it can not be done. I am saying that most can not do it.
Quote from spindr0:
What' ironic is that via the Imprudent Man Rule, Fool Service Brokers put their clients in Blue Chips for safety and performance. They owned the likes of AIG, BSC, GM, C, BAC, LEH, etc. For many of them, 50% down would look viable
Great example!
As for claims about transaction costs being expensive for those who actively trade: IB offers $1 trades.
Also consider adding to losing positions if there is enough of an ATR with the stock.