Comments on: Is ‘Buy and Hold’ Investing Fool’s Gold?

By: Ram Shah

Ram Shah — Sat, 21 Nov 2009 01:10:27 +0000

I think Buy and Hold strategy is a sound one. Only thing one has to consider is to buy a good quality Mutual fund, low cost like Vanguard and of-course prctice a balanced allocation approach. If your financial situation affords it, you can be aggresive (non balance) and that will also work very well but then most of us cannot afford to take that kind of risk.

By: Kent

Kent — Fri, 20 Nov 2009 17:08:56 +0000

I think buy and hold strategy’s are lost on most people today. They are boring and unemotional. I am an avid believer in buy-hold (and sometimes sell) strategies. I don’t think you can time the market. History has proven that its no different than spinning the wheel and seeing what number comes up. Sure you may hit the number every once in awhile, but more often than not your gonna lose. What most people don’t realize is there are two segments to the stock market. One is the institutional traders and one is Joe Trader you and me. Those are very different animals with very different objectives. One is a big cruise liner creating the waves, the other is a little sail boat trying not to drown. I would say most people do not devote enough time or are knowledgable to buy individual stocks and the risk to retirement is just too high. So for most people the safest thing to do is to invest in low cost mutual funds and/or ETF, indexes, etc. and keep contributing. The CNBC mentality “trade frequently and often” is just not appropriate for the general population. The only benefit it has is increased fees to brokerages.

By: Dave

Dave — Fri, 20 Nov 2009 16:29:46 +0000

Great article! With market timing, you have to be right twice. Once when you buy and once when you sell. And what about trading expenses? The only person who profits is the broker. And, to loosley quote author William Bernstein, a broker services his clients like Bonnie and Clyde used to service banks! Buy and hold within the confines of proper asset allocation for your age and risk tolerance is a time-tested method to slowly build wealth. Ten years is nothing compared to decades and decades. As an example, I started the foundation for my portfolio in October of 1987 when my financial advisor (whom I no longer need!) urged me to beg, borrow and steal money to put in the broad markets after the Dow dropped from 2200 to 1700 in one day! So as long as the Dow is over 1700, those stocks have made me money! (Not counting years of dividends!) Vanguard’s founder John Bogle said it best. Don’t just do something, stand there!

By: Manshu

Manshu — Wed, 18 Nov 2009 00:30:10 +0000

I am glad you talk about selling when discussing buy and hold, because that is something that not a lot of people do. It is not practical to think that someone will buy and hold forever, so it is important to seriously plan when you will sell.

By: MrsCasanova

MrsCasanova — Tue, 17 Nov 2009 21:35:41 +0000

i like your point on macro economic situations. i never took that into consideration, and I think i should. You’re right it is very important and shouldnt be overlooked.