verites

Is Buy-and-Hold Dead? Hardly

Roowns, Firstly, my comment was for an investor entering market today. Secondly, it seems you mistake buy and hold for 'buy and hold till infinity' or those investors that live off the dividends because they never sell.

An investor who invested in 2007 with strategy of buy and hold has surely lost a lot. So buy and hold was a bad strategy then.
but as I said in the last comment, suitable strategies are better known only in retrospect barring a few times like the present.

For me buy and hold means buy and hold 'medium to long term' (atleast 1-3 years). The extent to which prices are down right now or will be down in 3-6 months time, the strategy is bound to be a winner (even if the prices don't come back to the levels they were in 2007) . So it seems a good strategy for the present times.
You don't need a lot of analysis to know that every recession ends and when it ends equities and all other asset classes generally move up. No arcane anaysis or 'expert' advice is required to guess that odds are most likely to favour a 'buy and hold' investor (I amend may be fresh money or investor).

I agree it is a simple view and things might be different this time as many indicators are pointing to unprecendented level of turmoil. But it does seem a safer and less complicated bet right now.


On Nov 15 06:20 AM Roowns wrote:

> Kaizen, why take the current prices in consideration when buy &
> hold does not imply sell and most of the time you have all value
> in stocks.
> How can it helps me if I have 90% into stocks that crash 50% and
> then I buy 10% at 50% discount ? Is this economic thinking ? I think
> not...
> Buy & Hold is just for a multi-year uptrend, but have all eyes
> on market when times change.

Is Buy-and-Hold Dead? Hardly

I totally agree. Why are some people wrongly using the highs of 2007 as the buying price ? I mean to say, an investor buying today should use today's price that is down at least 25-30% on average. If you consider some emerging markets e.g. India and China that price is down 50-70%.

So for proper historical comparison, check the hypothetical case of a person buying stocks a year after any previous crisis and see how he/she did. He would invariably be a winner. Based on this, a buyer entering market today (better 3-6 months from now when more bankruptcies or bailouts are done) and holding some good stocks has almost nothing to lose. And will definitely do better than day traders in this excessively volatile market over the next 4-5 years. Though I agree some smart traders will do well too but that's more risky.
Buy and hold is among the best strategies for next period of 4-5 years, though stcok selection and country/asset allocation would be important factors.
So different periods have different strategies suitable for them. However, except for obvious cases such as of the present, suitable strategies are known only in retrospect to most people.


On Nov 14 10:27 PM investor88 wrote:

> The strategy must suit the occassion. Buy and Hold, trading, etc
> are all good strategies at certain periods, the strategies must be
> changed to suit the circumstances. There is just no one strategy
> that is superior to all others at ALL times.