I had this very conversation with someone over the weekend. The speed at which news, good, bad or madeup(and the follow-up correction) reaches the general public is so fast now that buy and hold just doesn't seem to make sense anymore. Obtaining real data on the internal workings of a company used to be this laborious and purposely dragged out process that probably helped decrease volatility, but gave you very little insight into how things were going.

Analysts and firm upgrades/downgrades were about the only thing that was readily available and those opinions were almost always bought and paid for in one way or another to suit a companies needs. Enter the Internet and bloggers and the need for instant information. There almost isn't enough time to manipulate the news now, although some still try. If something happens the public knows about it instantly and can react accordingly, whether a reaction is warranted or not.

Put all this together and you have a pretty strong case for no longer using buy-and-hold. The problem is that you do need to put more time into it to take advantage of the increased volatility. If a person has no interest in becoming an active trader then buy-and-hold may just work, though your hold period may now be shorter than it once was.

As an active trader, I am in the boat that you mention whereby I am taking the reins of my future as well as the opportunities the recent drop has provided. As things start to settle in a bit and the recovery is more apparently in place, it may be prudent for me to take some longer positions, but for the moment, staying active is paying off.

Investors have to be more prudent and reactive that is for sure.  Maybe some basic chart reading and basics of the market should be required for all high school and college graduates.  Watching 60 Minutes last night with people who lost most of their retirement is a good example.  All of them were intelligent people who just didn't pay attention to their portfolios.  The system is rigged for Brokers and Financial planners brokers who keep pushing products that are too expensive and give little return to these people.


High cost brokers and Financial planners love to  get you into managed portfolios with wrap fees, and all the costs and never mention a word about a low cost broad based ETF. In the 60 Minutes story it had some in Congress questioning how products are marketed. Moreover, and this one really grinds me, what the percentage of brokers and Financial planners  that call you and say we need to go to cash?

I was thinking as I was watching how much pain these people would have avoided had they just gone to cash when the 40 and 80 week simple moving average crossed on a twenty year chart  on the SPX and then had the knowledge to go back into the market when the 40 SMA crossed again.  Need I say more.

Buy & Hold is 20 to 30% gain holding longer is only for a spec stock.

Buy and hold is dead.

Buy and hold can still be an attractive fraction of a portfolio. Dividend paying companies, those with no debt, those with good sales no matter the market, are candidates (for example, MSFT). Add to that, here at TradeKing, you may have your dividends reinvested for free (a great service, and thanks to the decision-makers at TradeKing: it's appreciated). Buy and hold takes advantage of the gradual increase in general stock prices, historically around 9% a year. You need not work for that 9%, or incurr costs from frequent trading.

Traders I've known are split on the subject. Some want a steady part of the portfolio, usually invested in some buy and hold, as well as contrary investments for the times; this gives them a "hedge fund" within the entire portfolio. Other traders see buy-and-hold stocks, bonds, and so forth, as robbing them of account equity for short-term trading. The traders that do practice buy and hold, don't do it for as long as the average investor. They don't view the position as one to hold into old age. Rather, they actually attempt to buy low and sell high, much different from the "herd"; the herd, far too often, tends to buy high and sell low.

Spshapiro I read what Old Fart stated. I do not agree with him. In the next 60 days or so, if you are holding any long positions in stocks with the concept of Buy and Hold you see a good example of why I stated Buy and Hold is dead.

I'm with OldFart here. Investment strategy popularity moves in waves, and you need to be aware of those you are competing against. Buy-and-hold is viewed as great when we have a steadily rising market, and some time in the future the market will steadily rise again. You'll hear how great it is to hold stocks, etc. - the cycle will repeat.

Accordingly, I disagree with Corbin - I will let him, and many others, focus on analyzing the short-term. I will stick to evaluating strategy, to determine how things are likely to play out down the road, so I can be positioned accordingly. Note that this doesn't mean I slack off with putting in the hours, on the contrary, it means I have many more things to digest and analyze than a chart. But to each their own...

OldFart said: Traditionally just when we declare something for dead it is the best time to get in