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IRA Investing: BUY and HOLD a Good Idea ? Or do you Trade it? Are you kidding me?

|Includes: BUCY, CGMFX, Cleveland-Cliffs, Inc. (CLF), SPY, SPY
IRA Investing: BUY and HOLD a Good Idea ? Or do you Trade it? Are you kidding me??:
We "started the year at 1115.10 on the S&P 500 and here we are at 1115.05," wrote Carter Worth, Oppenheimer’s Chief Market Technician, in a note to clients this morning. Of course we are well below 1100 now and heading south. Worth, referring to yesterday’s close on the U.S. benchmark, pointed out in his report that the S&P 500 was at 1115 in April of 1998 and three more times within that time span."Some would conclude the market is cheap now or cheaper, anyway than at any time in the past 12 years,” wrote Worth. “Others would consider the takeaway to be buy and hold really is a joke."
 "In 12 months we’ll be down at least 20 percent from the April high," said Bert Dohmen, author of the Wellington Letter, a technical analysis newsletter that warned clients of a coming correction the day of the S&P 500’s high on April 26th. “Analysts are going by valuations and earnings. That’s history." Traders, as well as many fundamental investors who dabble in technical analysis, are putting aside their fundamental take because they believe that individual company research is not accounting for the uncertainty of so many macro things in this world, from the European bailout to coming Wall Street financial regulation.
SO: I ask again, is buy and hold a good idea in your IRA?
No. The bottom line is bolded above. 12 years later we are down 2% and ready to fall off a cliff. What’s your time frame? Did we learn the lesson from SPX 666?? Apparently not. Using defensive trading techniques in your IRA is now more important than the actual stocks or funds that you pick.
I bought, once upon a time, a large chunk of CGMFX for my IRA. I carefully researched the Fund Manager, Kenneth Heebner. Within one year, I was down 60%. I knew Mutual Funds just buy and hold, and are not real flexible and aren’t really there to trade. But Heebner, he was special. He held large slugs of cash at times, he shorted (huge, successful bets on shorting BAC and Countrywide). He surely was one who could navigate any market. I lost 60%, finally sold. Late better than never (well, somewhat); he went down another 25%. I went to cash and redeployed and have outperformed his Fund by 50% since. Moral of story:
1) You really can’t trust even the best to protect you and your money;
2) The stock market is ruthless, is unsafe even for long term money unless watched like a hawk. Trading techniques you see, read and learn on this web site, like when key support is broken in an Index or stock, are guides for your IRA too.
When SPX broke 1150, I yelled at the top of my lungs on Twitter and this web site (as did Blake, Nick et al) that support was broken. I went to 95% CASH. It didn’t last long as we plunged 998 on the Dow and I redeployed that CASH and actually made money that 4% down day. I even got AAPL @ 210, ka ching.
Obviously, you cannot day trade an IRA. But you can trade around positions by selling a little when you are up 25% in a position (I was up 102% this year in CLF, 78% in BUCY in my IRA). You can use trailing stops for half of each position, check them every couple weeks, moving them up every 10%, trailing by say 12%. In CLF you could have kept 75% of your profit. If you just bought and held, almost all would have been gone at today’s close.
You can also raise cash when things get dicey. You just sell something. You can hold some CASH at all times, for opportune buys, in your IRA. You can PLAY DEFENSE when the warnings are clear and the risk is high. My soon to be published book will give a complete road map for using trading techniques to protect your IRA. But the worst thing you can do is hold for 12 years and be down 2%...and still looking into the abyss.
 
Don’t Take Losses

This article is reprinted from the following websites where the author posts daily.


Disclosure: Long all mentioned in various accounts