Join Early Retirement Today
View Poll Results: Will you still Buy & Hold ?
YES 121 79.08%
NO 22 14.38%
Undecided 10 6.54%
Voters: 153. You may not vote on this poll

Reply
 
Thread Tools Search this Thread Display Modes
Old 11-25-2008, 05:20 PM   #41
Thinks s/he gets paid by the post
DblDoc's Avatar
 
Join Date: Aug 2007
Posts: 1,224
Quote:
Originally Posted by kumquat View Post
-Interest rates may go much higher. Not good for stocks. Worse for bonds
-Inflation may go much, much higher (where does the money come for all these bailouts?) Not good for cash or bonds
-Stocks on a historic basis aren't really "cheap". Things got so inflated in the 90's, looking at p/e's and ratios are dangerous. The "e" in p/e could keep deflating. Many good companies are selling foe P/e's of 0.5 - 4.0
-Japan L shaped depression? Are you investing in Japan? look world wide.

There's still much downside in stocks, and the upside over cash is minimal (maybe a few percent over cash?). Inflation?


I don't know either but in my mind they are the best bet.
All very good points.

There is a parrallel thread at the Bogleheads site, HerbertSitz post I think does a good job of summarizing why buy and hold is a good strategy: Bogleheads :: View topic - is this the time to stay the course? (part 2)

DD
__________________

__________________
DblDoc is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 11-25-2008, 08:16 PM   #42
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
harley's Avatar
 
Join Date: May 2008
Location: Following the nice weather
Posts: 6,430
I think I'll build my fortune going forward like the Kennedys and others did. Black markets! I think there's good money to be made there, when everything else is going to hell.
__________________

__________________
"Good judgment comes from experience. Experience comes from bad judgement." - Will Rogers, or maybe Sam Clemens
DW and I - FIREd at 50 (7/06), living off assets
harley is online now   Reply With Quote
Old 11-25-2008, 08:25 PM   #43
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
freebird5825's Avatar
 
Join Date: Feb 2008
Location: East Nowhere, 43N Latitude, NY
Posts: 9,017
"Ti-i-i-ime is on my side, yes it is" - Mick Jagger, Rolling Stones.

BUY and HOLD. if Jack Bogle sez it's good to go, then it's good to do.
__________________
"All our dreams can come true, if we have the courage to pursue them." - Walt Disney
freebird5825 is offline   Reply With Quote
Old 11-25-2008, 09:32 PM   #44
Recycles dryer sheets
 
Join Date: Nov 2007
Posts: 103
Quote:
Originally Posted by Notmuchlonger View Post
So what metric should I use to pull my money in and out of the market? Guess Im not smart enough Ill stick with the buy and hold method.
I don't want to get too deep into a discussion over this, but just to speak generally, the last two bubbles of the past decade (late 99' and the more recent mid 07') the market was very overpriced from a valuations perspective before the crash. Maybe that was just coincidence, but my common sense gut tells me it wasn't.

I would never advocate going "all in" then suddenly "all out", and I really don't like any timing method that has you making moves weekly, but I do see a lot of sense in, say, taking a hard look at your portfolio annually, and making 10-30% adjustments in weightings given the current factors.

But yeah, if you really feel like you have no idea what's coming next, then do no harm and be a pure buy-and-holder. That's better than several alternatives. I recommend buy-and-hold percentage portfolios to guys at work all the time who have no intentions of analyzing their portfolio annually, following technical indicators, reading tons of market climate articles, etc... stuff like I like to do.
__________________
slazenger is offline   Reply With Quote
Old 11-25-2008, 10:04 PM   #45
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Jul 2006
Posts: 11,018
Quote:
Originally Posted by harley View Post
Don't worry. We'll also be watching carefully and we'll get back in before it jumps 30%.
You'll need this, then....

__________________
Meadbh is offline   Reply With Quote
Old 11-26-2008, 09:52 AM   #46
Recycles dryer sheets
 
Join Date: Nov 2008
Posts: 131
Buy and hold has worked terribly for me. I started investing around 1995, and caught the dot.com. In 2005 I checked, and found that after a decade I came up above water. Ten years with nothing to show for it! Meanwhile I suspected a crash coming up and so sold and went to bonds.

If I had followed religion and stayed the course, today I would have lost money on every single purchase I made during my entire investing career, using buy and hold. As it is I have a 14% total return, 1% annualized, with my 401k short-intermediate bond fund (I have a far better return on my aggressive bond investing outside of the 401k).

Now sure, the academics will say "it's for the long term, in 20 or 30 years you'll have some great returns". Maybe. I'm understandably much more cautious with the buy/hold strategy than somebody who started using it at the beginning of a secular bull, rather than a secular bear as I did.

Investing in bonds last year have given me the first positive returns in my lifetime.
__________________
Architect is offline   Reply With Quote
Old 11-26-2008, 11:25 AM   #47
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Nov 2007
Posts: 7,530
Quote:
Originally Posted by Architect View Post
If I had followed religion and stayed the course, today I would have lost money on every single purchase I made during my entire investing career, using buy and hold. As it is I have a 14% total return, 1% annualized, with my 401k short-intermediate bond fund (I have a far better return on my aggressive bond investing outside of the 401k).

Now sure, the academics will say "it's for the long term, in 20 or 30 years you'll have some great returns". Maybe. I'm understandably much more cautious with the buy/hold strategy than somebody who started using it at the beginning of a secular bull, rather than a secular bear as I did.
What were you invested in??! Buying into the SP500 during 1995 when it was trading between 460 and 620 and selling today at 863 (plus 13 years of dividends) would produce positive returns, right?? Did you invest in a well diversified portfolio starting in 1995 or the hot stock/fund du jour?

I still haven't seen a better investment strategy than buying and holding long term a portfolio of well diversified asset classes that match your risk tolerance. Maybe like democracy, buy and hold is the worst form of investing, except for all the rest?
__________________
FUEGO is online now   Reply With Quote
Old 11-26-2008, 02:40 PM   #48
Thinks s/he gets paid by the post
charlie's Avatar
 
Join Date: Mar 2004
Location: Dallas
Posts: 1,211
Would I still buy and hold? Yes ....... for the time being anyway.

Cheers,

charlie
__________________
charlie is offline   Reply With Quote
Old 11-26-2008, 07:01 PM   #49
Full time employment: Posting here.
Darryl's Avatar
 
Join Date: Mar 2007
Posts: 577
As previously stated this thread should be divided between retirees and those still working.
In the still working camp probably 10 more years and I'm also just salivating at the pricing levels. I told my wife I'd just love to do a HELOC and put it in the market, she tensed up more than a little before I said don't worry that's not our plan.
We picked an AA plan that is true to our risk tolerance so we actually stick with it. A LBYM lifestyle (preaching to the choir here) and the discipline to run our plan will produce your best potential outcome. The aggressiveness gets to use good asset placement and TLH techniques to help things along and a little sloppiness at rebalance time but LOL gave me permission to call it opportunistice rebalancing so I don't have to feel bad about being a DMtimer.
__________________
I highjacked a rainbow and crashed into a pot of gold - Bon Jovi
Darryl is offline   Reply With Quote
Old 11-26-2008, 07:42 PM   #50
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
freebird5825's Avatar
 
Join Date: Feb 2008
Location: East Nowhere, 43N Latitude, NY
Posts: 9,017
this may sound very simplistic...and by all means throw darts ...but allow me to think out loud, if i may:
one teeny tiny fact often overlooked is if you reinvest all cap gains and dividends, you get more shares over time. more shares than the sum total you purchased all at once or thru DCA. that in itself is a gain for buy and holders. correct?
a temporary drop in NAV or share price, no matter how dramatic, doesn't mean squat for ROI until you redeem. if you have to redeem, all bets are off. buy and hold is negated by buy and redeem in the short term.
if doing a partial reedemption, more shares means more time til your number of shares goes to zero.
if you are in a position to have to redeem now and at a fast clip, vs wait for a recovery, then an agressive stock AA is the wrong place to be.
nobody is happy about the ferocious bear, but it does not seem to me to be a valid reason to dump "buy and hold" as a LONG TERM investment strategy.
go ahead...fire away...
__________________
"All our dreams can come true, if we have the courage to pursue them." - Walt Disney
freebird5825 is offline   Reply With Quote
Old 11-26-2008, 08:12 PM   #51
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
haha's Avatar
 
Join Date: Apr 2003
Location: Hooverville
Posts: 22,386
Quote:
Originally Posted by freebird5825 View Post
a temporary drop in NAV or share price, no matter how dramatic, doesn't mean squat for ROI until you redeem. if you have to redeem, all bets are off. buy and hold is negated by buy and redeem in the short term.
if doing a partial reedemption, more shares means more time til your number of shares goes to zero.
if you are in a position to have to redeem now and at a fast clip, vs wait for a recovery, then an agressive stock AA is the wrong place to be.
nobody is happy about the ferocious bear, but it does not seem to me to be a valid reason to dump "buy and hold" as a LONG TERM investment strategy.
go ahead...fire away...
I think you are right on. Trying to build a retirement fund is really different from living from that fund once you retire. It is pschologically different, and mathematically different. With more experience, we may find that trying to fund retirement with a high stock allocation is very risky, unless the retiree can completely get by on annuity type income such as pension and SS if necessary. The Dow is a pretty staid collection of stocks, and a few days ago it had lost over 50% in just a tad over a year.

Even if it comes back pretty well, assuming a 100% stock allocation(not that many would try this, but as an illustration) and assuming a starting WR of 4%, we now are withdrawing at 8% pa, or 8/12 =.67% per month. So if the market essentially goes nowhere for a year after the 50% break, our retiree will be down to $100,000,000-500,000-40,000, leaving her with only $460,000., assuming she can cut back and not take the inflation adjustment. If this market level is maintained, with unpredictible ups and downs, or just steady, she will be down another $40,000 after the second year, to $420,000. Needing $40,000 per year, and sooner or later running up against inflation adjustments that will have to be made if her lifestyle is not to be seriously damaged. Would she retire with $420,000?

I doubt that she would.

Ha
__________________
"As a general rule, the more dangerous or inappropriate a conversation, the more interesting it is."-Scott Adams
haha is offline   Reply With Quote
Old 11-26-2008, 09:17 PM   #52
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
NW-Bound's Avatar
 
Join Date: Jul 2008
Posts: 19,428
Quote:
Originally Posted by Architect View Post
Buy and hold has worked terribly for me. I started investing around 1995, and caught the dot.com. In 2005 I checked, and found that after a decade I came up above water. Ten years with nothing to show for it! Meanwhile I suspected a crash coming up and so sold and went to bonds.
Quote:
Originally Posted by FUEGO View Post
What were you invested in??! ?
I have the same question.


Now, about "buy and hold".

I did not vote because I didn't know if my definition of "buy and hold" was the same as everyone else's.

I bought stocks and held them until their fundamental changed. Now, sometimes I was able to see that a stock became overvalued, or that the company's prospect was about to get worse. But, most of the time, what saved me was that I tried to maintain a "sell discipline". I tried to limit my losses, and get out when I was down to 50c on the dollar. I still ride some stocks down to near zero, but I have done that less and less over time.

Now, that works only with individual equities, not with mutual funds which have much less volatility. Limiting individual stocks to 50% loss is not the same as limiting your MFs to 50%!

An economic downturn such as the dotcom bust or this current event affects some stocks sooner than others. When I saw that the malaise started to spread from one bubble-infected sector, such as tech in 2001-2003 and financial in this present time, to other sectors in the economy, it was time to sell some to raise cash.

It worked for me, except that I got back in too soon. Who would have thought that so many stocks got taken down to single-digit P/Es? Still, I have not bought all back in, and at this point still have 56% in cash.

And by the way, when I was fully invested at 70% equity, I had around 100 positions. I like to run my own mini mutual fund.
__________________
NW-Bound is offline   Reply With Quote
Old 11-26-2008, 11:05 PM   #53
Recycles dryer sheets
 
Join Date: Nov 2008
Posts: 131
Fidelity 401k. Diversified among, I forget exactly now, 5 funds, large cap, small cap, international ... never had to rebalance them, they all went up together, and down together.

Try this, I got a lot of money from selling my house (and renting, waiting for The Price Is Right in 2010). What to do with the money? Say I had DCA'd into a usual diversified set of Vanguard funds in 2005-2007, I suspect I'd be far underwater presently. Smelling recession in the air I did what you're not supposed to do, and put it all into long Treasuries which have done very well. Got lucky? Maybe, I did my homework though, being suspicious that this wasn't the decade(s) to buy and hold.
__________________
Architect is offline   Reply With Quote
Old 11-26-2008, 11:35 PM   #54
Thinks s/he gets paid by the post
DblDoc's Avatar
 
Join Date: Aug 2007
Posts: 1,224
Quote:
Originally Posted by Architect View Post
Fidelity 401k. Diversified among, I forget exactly now, 5 funds, large cap, small cap, international ... never had to rebalance them, they all went up together, and down together.

Try this, I got a lot of money from selling my house (and renting, waiting for The Price Is Right in 2010). What to do with the money? Say I had DCA'd into a usual diversified set of Vanguard funds in 2005-2007, I suspect I'd be far underwater presently. Smelling recession in the air I did what you're not supposed to do, and put it all into long Treasuries which have done very well. Got lucky? Maybe, I did my homework though, being suspicious that this wasn't the decade(s) to buy and hold.
Assuming you needed the money in ~ 2010 to buy another house the market would be the wrong place for it as the time frame was way to short. Treasuries were the perfect choice in that situation.

DD
__________________
DblDoc is offline   Reply With Quote
Old 11-27-2008, 12:22 PM   #55
Thinks s/he gets paid by the post
free4now's Avatar
 
Join Date: Dec 2005
Posts: 1,225
If I didn't buy and hold I wouldn't be in the market at all. It's the only way to deal with the volatility for me.
__________________
free4now is offline   Reply With Quote
Old 11-27-2008, 12:25 PM   #56
Thinks s/he gets paid by the post
free4now's Avatar
 
Join Date: Dec 2005
Posts: 1,225
There is a part of me that feels like a chump for not having noticed that the market keeps going down and more bad news keeps appearing just when the last piece of bad news was being forgotten. But my crystal ball isn't showing how long that will last, so I'm not going to bet on the bad news continuing.
__________________
free4now is offline   Reply With Quote
Old 11-27-2008, 01:19 PM   #57
Thinks s/he gets paid by the post
 
Join Date: Feb 2007
Posts: 1,905
Quote:
Originally Posted by Architect View Post
Buy and hold has worked terribly for me. I started investing around 1995, and caught the dot.com. In 2005 I checked, and found that after a decade I came up above water. Ten years with nothing to show for it! Meanwhile I suspected a crash coming up and so sold and went to bonds.

If I had followed religion and stayed the course, today I would have lost money on every single purchase I made during my entire investing career, using buy and hold. As it is I have a 14% total return, 1% annualized, with my 401k short-intermediate bond fund (I have a far better return on my aggressive bond investing outside of the 401k).

Now sure, the academics will say "it's for the long term, in 20 or 30 years you'll have some great returns". Maybe. I'm understandably much more cautious with the buy/hold strategy than somebody who started using it at the beginning of a secular bull, rather than a secular bear as I did.

Investing in bonds last year have given me the first positive returns in my lifetime.
I don't know what your investing asset allocation was but I just ran my numbers thru quicken and it shows my portfolio RR since 1/1/95 thru yesterday is 6.4% per year on a plain vanilla allocation of 60% stock and 40% bonds/cash mostly in low cost Vanguard funds. Sometimes the simpler the better and leave it alone!
__________________
ejman is offline   Reply With Quote
Old 11-27-2008, 01:20 PM   #58
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Jul 2003
Location: Kansas City
Posts: 7,409
15th year of retirement.

Target Retirement 2015 on full auto deduct to Prime MM once a yr.

Auto rebalances and shifts asset class mix as the clock ticks on.

I reset it the start of every year between SEC yield and 5% variable depending on if the crystal ball says 'hard times' or bon temps rolliere.'

heh heh heh - the chick with the crystal ball looks 'hot' - with my dirty old man glasses on.
__________________
unclemick is offline   Reply With Quote
Old 11-27-2008, 03:37 PM   #59
Moderator
Alan's Avatar
 
Join Date: Jul 2005
Location: Eee Bah Gum
Posts: 21,109
Quote:
Originally Posted by ejman View Post
I don't know what your investing asset allocation was but I just ran my numbers thru quicken and it shows my portfolio RR since 1/1/95 thru yesterday is 6.4% per year on a plain vanilla allocation of 60% stock and 40% bonds/cash mostly in low cost Vanguard funds. Sometimes the simpler the better and leave it alone!
Ditto, I am buy and hold, all MF's and re-balance twice a year. My return over this period is 7.2% per year. In 1995 I was 70/30/0 and as I got closer to RE in 2010 moved to my current position 40/50/10.
__________________

__________________
Retired in Jan, 2010 at 55, moved to England in May 2016
Now it's adventure before dementia
Alan is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
SBUX: Buy,hold,sell gwix98 Stock Picking and Market Strategy 5 12-21-2007 10:29 PM
Oil Stocks........Buy, Sell or Hold? Dawg52 Stock Picking and Market Strategy 17 08-09-2007 11:12 AM
"Buy & Hold" Asset Allocation article ladelfina FIRE and Money 7 06-09-2007 01:25 PM
A serious question (for once), about the theory of buy and hold and down markets AirJordan FIRE and Money 60 03-12-2007 10:29 AM
Buy and hold or market time? Dawg52 FIRE and Money 40 04-25-2006 03:37 AM

 

 
All times are GMT -6. The time now is 05:54 PM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.