Will you still Buy & Hold ?

[Moemg]

I am wondering if this market has people questioning the buy and hold method .This market has taught me to watch closely and take a lot out in times like these before it drops 40% . I know I'll lose some on the upswings but I'll offset that by smaller losses on the downswings . Yes, I 'm becoming a dirty market timer . How about you ?

 

[Lusitan]

I am still far away from needing to tap into my retirement accounts, and I don't plan on changing anything.

That said, my plan has all along called for becoming much more conservative as I approach retirement, and this market correction has cemented the importance of that in my mind.

 

[Dawg52]

I voted yes. Because after this mess is eventually sorted out, I'm all cd's. Buy and hold baby.

 

[DangerMouse]

I would certainly buy and hold however I intend to strictly enforce my rule of taking my money off the table every time something doubles. I will have plenty of capital losses to offset any gains for a few years to come.

 

[CuppaJoe]

Yes and no. Yes, I am a dirty Market timer. And yes yes yes I will buy and hold. What little I had in equities at the beginning of 2008 will be held as long term assets along with the large chunks I put in in June and Sept.-Oct., 2008. All of those holdings have lost significant value, but I like the game and will stay in.

 

[FIREd]

I voted yes, I believe in buy and hold for index funds, but not necessarily for individual stocks and/or managed funds.

I believe that the market is efficient and that trying to beat an index years in and years out is a fools game, so in that respect I still believe that buy and hold is the best strategy for the long term.

With the buy and hold strategy the only way to tame volatility is to set up an appropriate AA from the get-go. To avoid large drops in your portfolio's value, you would have to set up a pretty conservative AA. For example, based on historical returns (ex-2008!), you would have to keep no more than 40% of your portfolio in stocks in order to prevent a 20+% drop in portfolio value in any one year. Look for example at Vanguard Wellesley, with its 40% stock / 60% bond&cash allocation, it's "only" down about 18% YTD.

 

[Frugality_of_Apathy]

Buying and holding isn't the issue, well maybe it is indirectly.

"Buy and hold" is still sound advice if you mean Buy good companies stock and hold onto it because time will show well run companies end up on top.
If by buy and hold you mean keep shoveling money into the market all the time at anything and eventually it'll work out you're missing the point. Buying things like index funds and mutual funds and even psst... Wellesley, you aren't holding anything. You're just trading by proxy.

If you don't trust the buy low, sell high advice you could at least follow the buy low part. When the market starts making all time highs and everyone's high fiving and springing for the name brand dryer sheets it doesn't take a genius to think maybe they should use a smaller shovel or even start shoveling out as infinite expansion is just not possible.

 

[Moemg]

If you don't trust the buy low, sell high advice you could at least follow the buy low part. When the market starts making all time highs and everyone's high fiving and springing for the name brand dryer sheets it doesn't take a genius to think maybe they should use a smaller shovel or even start shoveling out as infinite expansion is just not possible.

I usually shovel some out during the good times . I've now learned to shovel a bucketful out .

 

[lazygood4nothinbum]

by the time i sell these houses i might actually be coming in on the bottom of this mess, in which case i'll be buying and holding for probably the rest of my life, or for 50 years (which ever comes first), or until right before the horizon of the next 100-year event. after all, now that i've experienced one, i'll know next time what to look for.

 

[Lusitan]

Buying things like index funds and mutual funds and even psst... Wellesley, you aren't holding anything. You're just trading by proxy.

How's that?

 

[Frugality_of_Apathy]

How's that?

How do you think fund managers are managing funds ?

 

[Rustic23]

Well, I would have to sell before I would have any money to buy and hold. Therefore, I am hold, not buy and hold.

 

[DblDoc]

Buy and hold inexpensive index funds in a diversified portfolio with an approrpiate bond:equity ratio for your need for risk:return. Good advice now, good advice 6 months ago, 6 years ago, 60 years ago. Nothing has changed. Risk has reared its ugly head - without it there would be no reward.

DD

 

[FUEGO]

Buying and holding. Not much other choice for me since research shows market timing to be ineffective in general, contrary to what the anecdotal evidence of all you successful market timers indicates.

 

[Moemg]

Buy and hold inexpensive index funds in a diversified portfolio with an approrpiate bond:equity ratio for your need for risk:return. Good advice now, good advice 6 months ago, 6 years ago, 60 years ago. Nothing has changed. Risk has reared its ugly head - without it there would be no reward.

DD

I've always believed like you that buy & hold was the way to go and have been following that since the 80's but had I taken a huge chunk out after the market declined 20% and let it sit in a money market until the market improved . I would have missed the first rally but unless that was a 25% rally I would still have been ahead . Am I wrong in my thinking ?

 

[chinaco]

I have been burned timing the market.

We are experiencing a market breakdown (systemic problem). I think the old advice still works (diversified portfolio of stocks and bonds). But it will take a while for people to regain confidence in the markets.

I intend to stick with a diversified portfolio and rebalance to my targets. But I am sitting tight until some of the volatility settles down and I have some confidence that the market is trending up. I am not sure we have hit a bottom yet. I am not worried about catching the stock market at the bottom. I will settle for averaging some money in a little later.

The trade-off is I could miss a big move up... at the same time I am hoping to miss a big move down. Right now things are completely unpredictable.


When, I do rebalance... I will not move any of my fixed assets into the stock market that I am not willing to wait 5 - 7 years for the returns. I am hoping to recapture some of the money back into bonds in a few years... but one never knows.

 

[Midpack]

I've ridden these out before, most recently the dotcom meltdown after which I did extremely well by doing absolutely nothing except continuing to DCA in. I remember fretting about that one too. The lower we go, the more upside potential there is. And I've heard 'this time it's different' and all the convincing accompanying articles enough times to know it never is. YMMV

 

[Lusitan]

How do you think fund managers are managing funds ?

Oh I see what you're getting at. I look at it differently, e.g. if I buy the FTSE All World Ex-US index and hold it, I consider it "buy and hold".

 

[Purron]

I voted no. The older DH and I get, the less time we have to wait for market rebounds. If I were younger, my answer would be different.

 

[TromboneAl]

This market has taught me to watch closely and take a lot out in times like these before it drops 40% .

You're saying that from now on, you're going to watch closely, and whenever the market is about to drop 40%, you're going to take a lot of your money out.

You know what the problem with that is, right?

 

[barbarus]

Theoretically, I believe that trying to time the market is just not possible for those of us that are less than the brightest lights in the sky.

That being said, the way the economy was run since the dot-com bubble was so blatantly corrupt and foolish, it was obvious being in equities was a disaster waiting to happen. And it did. When things settle down, there may well come a time for the simple investment technique of investing a set amount each week, good times or bad, but now is not that time.

Why would someone want to buy an object including a stock, at a higher price rather than lower? I prefer to buy things at the lowest possible price and sell at the high.

 

[REWahoo]

This market has taught me to watch closely and take a lot out in times like these before it drops 40% . I know I'll lose some on the upswings but I'll offset that by smaller losses on the downswings .

I think that's a great idea but the devil is in the details. Tell us how you're going to recognize 'times like these'?

 

[Moemg]

I think that's a great idea but the devil is in the details. Tell us how you're going to recognize 'times like these'?

Easy I'll read the board and as soon as Dawg starts banging his head I'll wait three weeks and then execute my plan .

 

[REWahoo]

Easy I'll read the board and as soon as Dawg starts banging his head I'll wait three weeks and then execute my plan .

Can't argue with logic like that!

 

[Moemg]

You're saying that from now on, you're going to watch closely, and whenever the market is about to drop 40%, you're going to take a lot of your money out.

You know what the problem with that is, right?

Of course we never know when a drop like this is coming but maybe setting a limit on the amount you are willing to lose will soften the blow or maybe not .