Comments on: Buy and Hold is Dead in the New Age of Investing http://20somethingfinance.com/buy-and-hold-is-dead-in-the-new-age-of-investing/ Personal Finance Blog for Young Professionals Tue, 22 May 2012 17:01:07 +0000 hourly 1 http://wordpress.org/?v=3.3.2 By: Derry Brown http://20somethingfinance.com/buy-and-hold-is-dead-in-the-new-age-of-investing/comment-page-1/#comment-8120 Derry Brown Fri, 19 Feb 2010 10:06:42 +0000 http://20somethingfinance.com/?p=1003#comment-8120 I agree with some of what you have to say but I don't think Buy and Hold is dead. I don't think that it was ever even alive. Mutual funds are the ones that sold people on the concept of Buy and Hold because that is how they can collect the most fees. What is even scarier is that those promoting the Buy and Hold approach lead people to believe that an average annual returns of 8+% can be expected over the long term. This is such a half truth it is a lie. Market history reveals that success through Buy and Hold occurs only when you are lucky enough to hold during a prolonged period when the market does well. There have been three periods longer than 57 years when the US market has achieved no real growth at all after inflation. The Buy and Hold investor thinks that they can’t lose over the long term but not many realize that the long term on the US market historically has been up to 130 years! Buy and Hold is the best option for most people, it is a much better option than not investing at all but for the diligent investor it is still far from the best option. See how the numbers stack up here – http://etfhq.com/blog/2010/02/19/buy-and-hold/ I agree with some of what you have to say but I don’t think Buy and Hold is dead. I don’t think that it was ever even alive.

Mutual funds are the ones that sold people on the concept of Buy and Hold because that is how they can collect the most fees. What is even scarier is that those promoting the Buy and Hold approach lead people to believe that an average annual returns of 8+% can be expected over the long term. This is such a half truth it is a lie.

Market history reveals that success through Buy and Hold occurs only when you are lucky enough to hold during a prolonged period when the market does well. There have been three periods longer than 57 years when the US market has achieved no real growth at all after inflation.

The Buy and Hold investor thinks that they can’t lose over the long term but not many realize that the long term on the US market historically has been up to 130 years!

Buy and Hold is the best option for most people, it is a much better option than not investing at all but for the diligent investor it is still far from the best option.

See how the numbers stack up here – http://etfhq.com/blog/2010/02/19/buy-and-hold/

]]> By: Britt (Your Roth IRA) http://20somethingfinance.com/buy-and-hold-is-dead-in-the-new-age-of-investing/comment-page-1/#comment-7581 Britt (Your Roth IRA) Wed, 10 Feb 2010 03:03:41 +0000 http://20somethingfinance.com/?p=1003#comment-7581 While it may be true that the market indices haven't budged much over the past decade, it's not necessarily true that buy and hold index fund investors have done poorly. If you're automatically reinvesting your dividends free-of-charge in a low-cost index fund, you're probably doing all right. And a down market is the perfect opportunity for outperformance as dividend yields increase. Jeremy Siegel highlights the power of dividend reinvestment in his 2005 book The Future For Investors. In one example, he shows that a purchase of the market index in October 1929 would've returned 0% over a 25 year period when you exclude dividends. But with dividends reinvested, it generated a 6% annual return. This shows the amazing power of dividends, particularly when market prices are depressed. Under the right circumstances, buy and hold is still alive and well! While it may be true that the market indices haven’t budged much over the past decade, it’s not necessarily true that buy and hold index fund investors have done poorly. If you’re automatically reinvesting your dividends free-of-charge in a low-cost index fund, you’re probably doing all right. And a down market is the perfect opportunity for outperformance as dividend yields increase. Jeremy Siegel highlights the power of dividend reinvestment in his 2005 book The Future For Investors. In one example, he shows that a purchase of the market index in October 1929 would’ve returned 0% over a 25 year period when you exclude dividends. But with dividends reinvested, it generated a 6% annual return. This shows the amazing power of dividends, particularly when market prices are depressed. Under the right circumstances, buy and hold is still alive and well!

]]> By: Joe http://20somethingfinance.com/buy-and-hold-is-dead-in-the-new-age-of-investing/comment-page-1/#comment-5151 Joe Thu, 05 Nov 2009 06:22:28 +0000 http://20somethingfinance.com/?p=1003#comment-5151 This article and site do nothing but perpetuate terrible investment advice for a new generation of investors. I would vernture say that most investors never truely bought and held in first place. And the ones that did, only did so because they didnt know what else to do. Most academic professors have debunked this market timing crap that the street pushes like an exciting new toy. Oddly it's the same old story. We know what you dont so pay us. Madoff. Finance models indicate timing only accounts for 4% of asset class returns vs. 96% resulting from mutliple factors (fama/french). Even if your not indoctrinated with efficient market theories and you think the markets are in-efficient, so what. Try and trade on it. The article murders the context of Mr. Buffets quote. Buffet who stated most investors should use sensible low cost index funds. Whats that..time and time again 85% of active traders fail to beat indices over 5 and 10 years. What... everyone lives for more than 10 years.... No. Why is it that most of the investment community/media have not progressed. I remember typing into my computer dos prompts for gods sake. What was it...Don://win/joust. Your site misdirects a new generation adivse seekers online. Now we have new people who profit off active trading or low cost/trades a lot (hmmm trading fees) brokerages. Replacing the guys on the street. Common sense tells you that you can't pick the next horse at the track or the next stock. C'mon!! Can we start fresh please with new media and get rid of 99% of "active advice givers." The world is upside down when Vanguard founder, Bogle, who preaches and writes of the the failure of active management but then come to find that Vanguard has over half of their offerings using "active" management. RRRR This article and site do nothing but perpetuate terrible investment advice for a new generation of investors. I would vernture say that most investors never truely bought and held in first place. And the ones that did, only did so because they didnt know what else to do.

Most academic professors have debunked this market timing crap that the street pushes like an exciting new toy. Oddly it’s the same old story. We know what you dont so pay us. Madoff. Finance models indicate timing only accounts for 4% of asset class returns vs. 96% resulting from mutliple factors (fama/french). Even if your not indoctrinated with efficient market theories and you think the markets are in-efficient, so what. Try and trade on it.

The article murders the context of Mr. Buffets quote. Buffet who stated most investors should use sensible low cost index funds. Whats that..time and time again 85% of active traders fail to beat indices over 5 and 10 years. What… everyone lives for more than 10 years…. No.

Why is it that most of the investment community/media have not progressed. I remember typing into my computer dos prompts for gods sake. What was it…Don://win/joust.

Your site misdirects a new generation adivse seekers online. Now we have new people who profit off active trading or low cost/trades a lot (hmmm trading fees) brokerages. Replacing the guys on the street. Common sense tells you that you can’t pick the next horse at the track or the next stock. C’mon!! Can we start fresh please with new media and get rid of 99% of “active advice givers.”

The world is upside down when Vanguard founder, Bogle, who preaches and writes of the the failure of active management but then come to find that Vanguard has over half of their offerings using “active” management.

RRRR

]]> By: Evgeniy http://20somethingfinance.com/buy-and-hold-is-dead-in-the-new-age-of-investing/comment-page-1/#comment-4751 Evgeniy Tue, 06 Oct 2009 16:38:34 +0000 http://20somethingfinance.com/?p=1003#comment-4751 Now bad time to buy. Has voted NO. But movement can change. Therefore it is necessary to supervise a situation Now bad time to buy. Has voted NO. But movement can change. Therefore it is necessary to supervise a situation

]]> By: mlgreen8753 http://20somethingfinance.com/buy-and-hold-is-dead-in-the-new-age-of-investing/comment-page-1/#comment-4590 mlgreen8753 Fri, 18 Sep 2009 00:20:22 +0000 http://20somethingfinance.com/?p=1003#comment-4590 By and hold is far from dead, especially in the recession when everything is under valued. Now is the time to buy low and hold for appreciation to deliver a future profit. Mentor Capital (MNTR) may be just the stock for this strategy since stock price gains could result from the 20% merger they have with a bio-tech company in the clinical trial process of marketing a new breast cancer treatment that seemingly trumps all others. By and hold is far from dead, especially in the recession when everything is under valued. Now is the time to buy low and hold for appreciation to deliver a future profit. Mentor Capital (MNTR) may be just the stock for this strategy since stock price gains could result from the 20% merger they have with a bio-tech company in the clinical trial process of marketing a new breast cancer treatment that seemingly trumps all others.

]]> By: direct shares http://20somethingfinance.com/buy-and-hold-is-dead-in-the-new-age-of-investing/comment-page-1/#comment-4416 direct shares Wed, 26 Aug 2009 08:33:56 +0000 http://20somethingfinance.com/?p=1003#comment-4416 Buy and Hold philosophy have worked out for me for quite some time and I am actually comfortable with it. However, since the recession changed the stock market climate, what you have said is true. I am slowly being slaughtered and being greedy is a better option than the old buy and hold scheme. If I am Buffet, I will gladly pour my money despite of the risk. Sadly I am not. The stock market is too volatile and one false move, I might see my money swirling down the drain. So to prevent this, I would rather place my money on high yield at lower risk investments and savings account. I am also considering investing in Mutual and index funds but I have little knowledge about it. I really hope that the market will regain its strength soon. For now, being cautions and patient is the best option. Buy and Hold philosophy have worked out for me for quite some time and I am actually comfortable with it. However, since the recession changed the stock market climate, what you have said is true. I am slowly being slaughtered and being greedy is a better option than the old buy and hold scheme. If I am Buffet, I will gladly pour my money despite of the risk. Sadly I am not.
The stock market is too volatile and one false move, I might see my money swirling down the drain. So to prevent this, I would rather place my money on high yield at lower risk investments and savings account. I am also considering investing in Mutual and index funds but I have little knowledge about it.
I really hope that the market will regain its strength soon. For now, being cautions and patient is the best option.

]]> By: rana http://20somethingfinance.com/buy-and-hold-is-dead-in-the-new-age-of-investing/comment-page-1/#comment-4415 rana Wed, 26 Aug 2009 08:15:40 +0000 http://20somethingfinance.com/?p=1003#comment-4415 I am a new investor too and I kinda regret started in stock trading late. Since I have to deal with the new stock market environment, my strategy include investing in high yield at low risk investments as well as placing my money in high yield savings account. I am also thinking of investing in mutual and index funds. I will definitely not give much thought about option trading. I am a new investor too and I kinda regret started in stock trading late. Since I have to deal with the new stock market environment, my strategy include investing in high yield at low risk investments as well as placing my money in high yield savings account. I am also thinking of investing in mutual and index funds. I will definitely not give much thought about option trading.

]]> By: Beginner http://20somethingfinance.com/buy-and-hold-is-dead-in-the-new-age-of-investing/comment-page-1/#comment-3888 Beginner Mon, 08 Jun 2009 03:29:43 +0000 http://20somethingfinance.com/?p=1003#comment-3888 Ahhh..Gosh i have been thinking about this myself. Very interesting topic. Being a relatively new investor, my strategy for today's market is to invest in low price stocks and sell them relatively fast. I feel for long term investments something like 401(k) and a roth ira account are good enough and have got me covered. I am using stock as a get rich quick scheme and maybe conducting one of the fundamental errors of investing as i have read in several articles. I guess i'll just have to find out for myself... Ahhh..Gosh i have been thinking about this myself. Very interesting topic. Being a relatively new investor, my strategy for today’s market is to invest in low price stocks and sell them relatively fast. I feel for long term investments something like 401(k) and a roth ira account are good enough and have got me covered. I am using stock as a get rich quick scheme and maybe conducting one of the fundamental errors of investing as i have read in several articles. I guess i’ll just have to find out for myself…

]]> By: Sector Timing Report http://20somethingfinance.com/buy-and-hold-is-dead-in-the-new-age-of-investing/comment-page-1/#comment-3448 Sector Timing Report Tue, 14 Apr 2009 00:41:06 +0000 http://20somethingfinance.com/?p=1003#comment-3448 I agree with your comments that we are in a new revolution of investing and the "Buy and Hold" mentality that worked for an earlier generation may not work so well going forward. We see Tactical Asset Allocation and Sector Rotation strategies with ETFs as the future of investing to beat the indexes. There is no doubt it requires a lot more work and discipline, but it is worth it over the long run. I agree with your comments that we are in a new revolution of investing and the “Buy and Hold” mentality that worked for an earlier generation may not work so well going forward. We see Tactical Asset Allocation and Sector Rotation strategies with ETFs as the future of investing to beat the indexes. There is no doubt it requires a lot more work and discipline, but it is worth it over the long run.

]]> By: RaiulBaztepo http://20somethingfinance.com/buy-and-hold-is-dead-in-the-new-age-of-investing/comment-page-1/#comment-3286 RaiulBaztepo Sat, 28 Mar 2009 22:18:40 +0000 http://20somethingfinance.com/?p=1003#comment-3286 Hello! Very Interesting post! Thank you for such interesting resource! PS: Sorry for my bad english, I'v just started to learn this language ;) See you! Your, Raiul Baztepo Hello!
Very Interesting post! Thank you for such interesting resource!
PS: Sorry for my bad english, I’v just started to learn this language ;)
See you!
Your, Raiul Baztepo

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