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Re: Buy and hold or market time?
Old 04-20-2006, 07:32 AM   #21
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Re: Buy and hold or market time?

Doug, here's a recent article on the "Sell in May and Go Away" school of investing. It says the practice is supported statistically, but a better place to put your money when you go away for the summer is in bonds, not cash.

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Re: Buy and hold or market time?
Old 04-20-2006, 08:31 AM   #22
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Re: Buy and hold or market time?

Quote:
Originally Posted by DFW_M5
Does anyone consider the sell in May go away maxim to be market timing? I understand that historical returns support the concept of going to cash during the historically weakest timeframes for the market (May - Oct) and staying in at all other times.* I am really considering doing just that this year since things seem a little too frothy and perilous right now to simply hold tight.

Doug
Yes of course!!! Sell in May and go away means sell ALL your equities - go to cash presumably - and then buy equities again in October.

If your investments are in taxable accounts, this guarantees short term tax rates on any profits.

Audrey
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Re: Buy and hold or market time?
Old 04-20-2006, 08:42 AM   #23
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Re: Buy and hold or market time?

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Originally Posted by brewer12345
It is amazing to see a person who is not an investment professional absorb and implement the best practices of the industry.* I wish it were more common, frnakly.
Brewer - that was a very nice thing to say!

I had a few years to figure out my "discipline". Thanks to the great university of the internet, these practices are documented.

I really think any engineering type person could do the same. I picked my investment style based on wishing to spend minimal time maintaining my portfolio and knowing myself well enough to know what would "let me sleep at night" - a pretty key characteristic for an investment style. I notice that many of my investing peers love to "tweak" things and are willing to spend a lot of time at it - mostly for the entertainment value I suspect. To each his own.

And frankly I've met many investment professionals who didn't seem to know diddly squat. Of course those are the guys selling things to the general public. The really good ones are hidden from the general public managing huge portfolios for institutions or wealthy individuals - if they are not already retired!

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Re: Buy and hold or market time?
Old 04-20-2006, 09:06 AM   #24
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Re: Buy and hold or market time?

Quote:
Originally Posted by audreyh1
And frankly I've met many investment professionals who didn't seem to know diddly squat.* Of course those are the guys selling things to the general public.* The really good ones are hidden from the general public managing huge portfolios for institutions or wealthy individuals - if they are not already retired!

Audrey
You got it exactly right: most of the so-called investment professionals the retail person is likely to meet are salespeople, pure and simple. The sophisticated people arre usually locked away quietly managing institutional or very high net worth individuals' money and don't talk to the average joe.
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Re: Buy and hold or market time?
Old 04-20-2006, 10:56 AM   #25
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Re: Buy and hold or market time?

What Brewer said.

This rings true to me, the image I use is the huge amount of visable gambling in Las Vegas. Yet the high rollers get their own invisable space, almost another universe. In the 1980s I had a friend in London who did some metals market trading on the London Metal Exchange. He was also later a manager for (I assume a small) part of the Rothchild family fortune. He explained what he did, things like hedging, but it didn't stick in my mind much, makes more sense these last 10 years or so.
I remember him saying, and this is 1980s London, that the traders would work their way up and eventually make 1 to 3$M a year, but their career life expectancy was also 1 to 3 years before burning out. For all the discussions on these boards and all the mutual funds, the rich really are different. They do employ financial managers but not the type we would generally encounter. And the approaches they take may not be appropriate for folks with normal assets and income. They don't just buy stocks; like Warren Buffett, they buy the whole company.
But I have to manage my money the way it comes in; pension, 401k/TSP, Roth, DRIP stocks, ibonds & cash. I don't confuse myself with the more sophisticatd investment ideas. I dollar cost average because thats how the money comes in. I buy and hold because I don't have the time, and I mean the 24/7, it takes to be a trader.






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Re: Buy and hold or market time?
Old 04-23-2006, 01:57 PM   #26
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Re: Buy and hold or market time?

Buy and hold is an old idea that doesn't pertain to today's markets.

Even the king of buy and hold, Warren Buffet, doesn't really support the idea in today's markets.

Read the book, "Trend Following: how great traders make millions in up or down markets".

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Re: Buy and hold or market time?
Old 04-23-2006, 02:21 PM   #27
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Re: Buy and hold or market time?

Audrey; we follow very much the same approach - and I certainly call myself a buy-and-hold investor (except for a few % in seperate account for gambling! ).

I have been using the calender year for re-balancing only but want to move towards an "out of range" re-balancing method too. Can you clarify what you do? 5%? Are you only refering to stocks vs bonds (I.e. a shift from say 50/50% to 55%/45%?) or in between subclasses(value/foreign/EM/small Etc.).

Cheers!
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Re: Buy and hold or market time?
Old 04-23-2006, 02:59 PM   #28
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Re: Buy and hold or market time?

Code:
Buy and hold is an old idea that doesn't pertain to today's markets.
what, then, would you suggest for a near-idot like me who is unable to predict the future of the markets?
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Re: Buy and hold or market time?
Old 04-23-2006, 03:30 PM   #29
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Re: Buy and hold or market time?

buy and hold in individual stocks never..............buy and hold in diversified mutual funds always
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Re: Buy and hold or market time?
Old 04-23-2006, 09:57 PM   #30
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Re: Buy and hold or market time?

Quote:
Originally Posted by d
Code:
Buy and hold is an old idea that doesn't pertain to today's markets.
what, then, would you suggest for a near-idot like me who is unable to predict the future of the markets?
Have someone else manage your money or be in for a HUGE learning curve for personal investing.

Or as others have said, invest in mutual funds and/or index funds. If you want to make a higher return, look into Exchange Traded Funds (Just as the name implies, they are funds traded on an exchange). You can diversify between a few.

They follow industries/sectors, which will allow an investor/trader to put money into a whole industry instead of one company within an industry. Profit potential is greater, but risk is as well. This route requires greater knowledge in investing/trading. I'd consider ETFs as a few steps above a fund in terms of risk, yet a few+2 steps below individual stocks.

http://finance.yahoo.com/etf

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Re: Buy and hold or market time?
Old 04-23-2006, 11:34 PM   #31
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Re: Buy and hold or market time?

Quote:
Originally Posted by mathjak107
buy and hold in individual stocks never
Why not?

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Re: Buy and hold or market time?
Old 04-24-2006, 03:51 AM   #32
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Re: Buy and hold or market time?

individual stocks are tough to buy and hold unless you have enough to actually be a little mutual fund .....i find im not smart enough to pick just the right company at just the right time in the right sector and even if i got the first part right i still have to worry about what the competitors are doing and of course there is still market risk to contend with....lets not even mention a bad earnings report that sends you down 20 or 30%. even when the markets rising....i found when i bought individual stocks i averaged far less than my mutual funds which just keep chugging along over the last 20 years...
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Re: Buy and hold or market time?
Old 04-24-2006, 04:18 AM   #33
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Re: Buy and hold or market time?

Quote:
Originally Posted by mathjak107
individual stocks are tough to buy and hold unless you have enough to actually be a little mutual fund .....i find im not smart enough to pick just the right company at just the right time in the right sector and even if i got the first part right i still have to worry about what the competitors are doing and of course there is still market risk to contend with....lets not even mention a bad earnings report that sends you down 20 or 30%. even when the markets rising....i found when i bought individual stocks i averaged far less than my mutual funds which just keep chugging along over the last 20 years...
Ok.

I actually do try to create my own little mutual fund, with my thinking going like this: if I believe in efficient markets, than I don't need to pick the right stocks at the right time, I just need to pick a (semi-)random bunch of stocks at any time, and the market will on average price them in some reasonable manner.

You do need to be willing to accumulate lots of tiny little holdings to do this, or else you will end up with an unnecessarily risky lack of diversification. But if you do buy-and-hold, you can make your effective expense ratio almost arbitrarily low. (My real reason has to do with tax and asset location issues, but the cost savings are some compensation for the added paperwork involved.)

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Re: Buy and hold or market time?
Old 04-24-2006, 04:18 AM   #34
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Re: Buy and hold or market time?

my friend joe was a big believer in buy and holding individual stocks ..why? because his mom 30 years ago had bought a bunch of blue chips thrown the certificates in a drawer and became a wealthy woman....i said joe this isnt your mothers stock market anymore those days are over.he would argue the point...well low and behold joe was a big buyer of lucent.needless to say joe took a bath.,..
the other thing was i said how do you know your mother did well.his answere look how much money she left in stock....
i said lets run the numbers as best as we can *on the stocks.....joes moms return overall ,around 6%..........even an index fund would have beaten her return without breaking a sweat.......
today i think most buy and holders of individual stocks do so just because they have no real interest in watching the market,it just seems like a good idea.....
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Re: Buy and hold or market time?
Old 04-24-2006, 04:23 AM   #35
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Re: Buy and hold or market time?

if you can buy enough individual issues to give you enough diversification to actually become part of the efficiant market as opposed to a speculator in a stock then its okay....my problem was i even tryed the dogs of the dow theory......buying the 10 highest yielding stocks in the dow....except for altria and exxon the other 8 died a horrible death the last few years...im glad i got out when i did
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Re: Buy and hold or market time?
Old 04-24-2006, 04:38 AM   #36
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Re: Buy and hold or market time?

Quote:
Originally Posted by mathjak107
if you can buy enough individual issues to give you enough diversification to actually become part of the efficiant market as opposed to a speculator in a stock then its okay....my problem was i even tryed the dogs of the dow theory......buying the 10 highest yielding stocks in the dow....except for altria and exxon the other 8 died a horrible death the last few years...im glad i got out when i did
10 is way too few. I think you need to have at least 30-50, and should really aim for as many as possible. I make it a rule never to buy the same company twice. All new money and reinvested dividends go into new names.

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Re: Buy and hold or market time?
Old 04-24-2006, 06:29 AM   #37
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Re: Buy and hold or market time?

Yawn!

To repeat once again: 75% Target Retirement 2015 and 15% individual stocks.

Is 75% balanced index - buy and hold, market timing cause they rebalance automatically, or slice and dice cause they hold mutiple asset classes Do I really care? Nope - current yield is enought to live on in hard times and 5% of year end portfolio value is enough for it's part of funding ER.

15% individual stocks is male, hormonal, and if I go go broke I'll be pissed off but not pissed on(broken as it were). If I done good - well that's a little lagniappe.

My philosophy is all over the map in stocks - from high div to high growth - a mish mash that floats my boat. Will try to get down to 20 stocks and less than 10 DRIP plans by the end of the year - I hope. I do have a mental bias toward Norwegian widow/Ben Graham middle of the road -div/div growth boring stocks.

The old academic curves used to show a hard right turn at about 4 stocks or so - haven't seen any lately.

Lucky 13th year of ER and different than prior years holdings - switching from Lifestrategy(60/40 ish fixed) to Target and canceling DRIPs with reinvested divs toward more div growth since current divs seem to be in a popular cycle. Looking for more growth dogs - me.

heh heh heh heh - random first cup of coffee thoughts - subject to change.
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Re: Buy and hold or market time?
Old 04-24-2006, 07:49 AM   #38
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Re: Buy and hold or market time?

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well low and behold joe was a big buyer of lucent.needless to say joe took a bath.,..
Oh, there we go again bringing up Lucent, etc. as a reason that buy and hold of individual stocks doesnt work. I owned Lucent and some other tech. stocks and sold and made a profit. There certainly was enough info. out there that people saw the problems early. I think the problem that a lot of individual investors have is that they hold thinking to recoup their paper losses in these titanics and also wont buy when prices are low. Buy and hold works great for Buffet/Lynch type stocks that you buy at a reasonable price.
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Re: Buy and hold or market time?
Old 04-24-2006, 10:18 AM   #39
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Re: Buy and hold or market time?

Quote:
Originally Posted by unclemick2
Ya little lagniappe.

O.K. UncleMick, you Cajun Dandy.

It's raining again today, and no golf, so have a chance to waste (your time)

Couldn't stand it anymore, so I finally looked up the meaning of "lagniappe".

"Used primarily in So. LA. :

"A small gift given a customer by a merchant
at the time of purchase".

Makes sense now.

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Re: Buy and hold or market time?
Old 04-24-2006, 10:38 AM   #40
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Re: Buy and hold or market time?

Why, I got a lagniappe just a couple of weeks ago <hmm, sounds riske'>. Bought a T-shirt from the Turtle Project (protecting sea turtle nests on the beach) for $17 and they tossed in a Turtle Project key chain. Laissez les bon temps rouler!
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