Ever Tempted to Buy and Hold?

Quote from bobcathy1:

There is a very easy way to play the game instead of cost averaging SPY.
When the daily MACD crosses buy long or short the next day at 4 and then get out at the following pivot point or cross the morning at 10 following it.
It works for the trader who works all day at another job and can't afford to be a day trader.
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When the MACD crosses what, the zero line, or the short ma over the long ma, (the road)? And what pivot point?

Yours is the vaguest proposal I have ever heard
 
I think a very strong case can be made for a modified buy and hold strategy or dollar cost averaging, or both.

What do I mean by modified buy and hold? If in 99 you had bought in to REITs when they were yielding 10% and held until everyone was talking about how great they are you would have done very well. Now, all the retail investors are dumping stocks to buy a second house.

The same case could be made for Utility Stocks, Bonds, Small, Medium, and Large Cap stocks. Plus Value and Growth. Remember in 99 and 00 when Value Managers were folding up shop? Value rocked last year.

If we were not in a historical downturn of a global nature, many B&Hs would be vindicated. Anyone who bought in the 80s and early 90s is still OK. Personally, I wish I had sold everything at the top. But that is in the movies not real life.

The Dollar Cost Averaging into a well diversified group of mutual funds via a low cost provider or a 401k plan IMO makes a lot of sense. And now that the death of buy and hold is making press, you have to think....they were wrong about real estate in 99.
 
True buy and hold, as in buy an individual stock and put it in a drawer, is exactly what murdered most individual stock investors. You can give up 10 years of gains in 2 years. Its a flawed strategy, plain and simple. It is the classic mistake, thinking you can treat a stock like a mutual fund. However there will be a perpetual stream of newbies who will do just that.
 
Quote from Corso482:

Ya, I know, we could all write novels on why the buy and hold strategy is worthless. Still, for those with 30+ years until retirement, are you ever tempted to buy some new company with a great story? I sometimes wonder if when I'm 70 in a rocking chair I'll say to myself, "I wish I had just bought something and held it, instead of messing around with all that trading nonsense."
If nothing else, I wonder if it might not be a good idea to dollar cost average SPY or DIA every month.
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Most of the people I've ever seen undertake a dollar cost averaging program quit when the price goes down.

Dollar cost averaging is one of those ideas that seems to make sense on paper. What they can't explain to you though is that when the price goes down 50% it does it for a reason. The news gets bad, and gives you all sorts of rational reasons not to buy more. Combine this with the fact that when prices drop some people lose their jobs. In other words, you might now have the means to continue your program. In fact, at the worst possible time you might have to sell just to survive.

Let's hope that when you're 70 you've got something better to do than regret not buying and holding a stock!

OldTrader
 
Buying with longer moving average[s ] has been back tested 10 years.[Active Trader Magazine , with SPY, QQQ worked well]

Prefer to buy and hold for about 30 minutes to 30 days +,depending.:cool:

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''Profit is a result of [labor] not capital''
Don Bright- Technical Analysis of Stocks & Commodities Mag.
 
Quote from dgabriel:



When the MACD crosses what, the zero line, or the short ma over the long ma, (the road)? And what pivot point?

Yours is the vaguest proposal I have ever heard
More...


Guess I was supposing you had more experience and knew what I meant.
These are indicators that you can set up on a charting program.
The MACD is when the slow and fast line crosses or the MACD histogram goes from the top to the bottom of the line. Nothing to do with the zero line. The histogram is easier to see. Go to www.stockcharts.com for an explanation on how to use indicators.
Pivot points are programmed in the charts as well. Much easier than explaining the math behind them. Basically a lagging indicator. Better to be quicker than what they indicate. Maybe a better way is to get out when they touch a Bollinger Band and move away for a bar.

Hopes this helps you.
 
Oldtrader,

You make a very good point about dollar cost averaging. I would add that this is true in almost all business. People are most likely to expand business operations when they should be contracting, and fearful to take risk when they should be betting the farm. Hence the problem with getting rich vs the likelihood of failure.

I would be interested to know your thoughts on building wealth long term for the "average" person.

Regards,
 
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