Making the Case for Buy-and-Hold

Abnormal Returns has a good roundup of links on buy-and-hold.

I often hear the argument that buy-and-hold doesn’t work because the market does in fact occasionally down. Yes, that’s true, but the case for buy-and-hold isn’t for a perpetual rally. Instead, it claims that being in stocks all the time is more efficient than a person’s ability to time the market consistently.

Here’s a stat to consider: On average, the stock market’s best day every 100 trading days is roughly equal to the market’s return average return over 100 days. The other 99% of the time, the market is net flat. So to be a good timer, you have to a really, really good timer. And you get no days off.

Comments

[PseudonymName:]

Eddy,

You can follow my market timing system and track my performance for comparison. I post all of my trades in advance so there is no way for me to fudge the numbers. Here is my last post:

seekingalpha.com/insta...

Oct 23 02:27 PM

[Jasper M:]

NOTE that the buy and hold apologists come back out, right at(=same month as) the new high for the rally.
TEXTbook!

Oct 23 05:33 PM

[Mikey95112:]

I also like the fact that when you buy a stock that has dividend re-nvestment options, you also save by both cutting out broker commisions as well as gaining more stocks at a cheap value based on dividend distribution which also locks out the mindset of timing the market.

Oct 23 09:13 PM