Will you still Buy & Hold ?

[bigla]

I think some of these polls should be divided between those still working and those who have retired. If I was younger and still working I would be on the not nauseous side of anxious as I am now, while watching what I need to live on for the next 20-30 years decrease mightily. I don't know if I have the time to see it return to previous high levels, nor any extra cash to buy these so called bargains out there.
Larry

 

[Bikerdude]

I think some of these polls should be divided between those still working and those who have retired.

What he said.

 

[kumquat]

I voted undecided since that's the closest answer.

Index funds - buy & hold

Individual instruments - buy and hold until you wouldn't buy more at the current price.

Not a new thought, bought it years ago and am still holding.

 

[Nords]

I am wondering if this market has people questioning the buy and hold method .

We've spent six years getting to a B&H portfolio, and just finished what we hope is the last round of tax-loss selling that we'll have to do for quite a few years. Need to buy some more PID as soon as we finish fishing for change in the sofa cushions and maxing out our HELOC.

I'm still undecided on reinvesting the dividends. But I think it's better to reinvest dividends when the market is sucky than it is to reinvest them when it's hitting all-time highs.

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 ?

Good luck with that! As Bernstein says, I'd rather live my life.

 

[harley]

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?

Don't worry. We'll also be watching carefully and we'll get back in before it jumps 30%.

 

[DblDoc]

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 .

Set the limit by determining your bond:equity ratio and tolerance for loss tempered by your need for risk. Until now this was mostly an academic exercise but now we all really know what our tolerance for loss is. And a painfull lesson it has been.

DD

 

[Ronstar]

I voted buy and hold. I'm not buying a lot, but I expect to hold this portion for at least 10 years

 

[retire@40]

I'm sticking with my asset allocation strategy.

In a few years, I'm sure all the geniuses that are buying now will be telling us what a great move they made buying at these levels. If I had double the cash I currently have, I would be buying more now too. I have bought more into real estate in the past few months since I was under-allocated in that sector.

Buy and hold for me.

 

[blessed]

I think it is like two farmers: The first one cultivate and plants( invests in a very diversified portfolio) and waits for Spring. The second leaves the land to do what it will. When the seeds sprout and render a great harvest the second person can't rush out a try to get the seed in the ground then it is too late.

 

[John23]

Do I believe in buy and hold? Depends on when you get in

If you bought in, in 1980 and held for 20 years, it works...the market went up 10 times. The last 10 years, the market has been flat....a slight difference.

The fallacy of "buy and hold" is thinking that every market participant has the same chances and the same opportunities...just isn't the case.

I'm not in the market now, don't plan to be. There could be a nice rally here. But I just don't see the case for stocks going up 8-10% a year for the next 10 years.

-Interest rates may go much higher. Not good for stocks.
-Inflation may go much, much higher (where does the money come for all these bailouts?)
-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.
-Japan L shaped depression?

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

Still, we could rally a few thousands points, it's possible there's been so much selling. But what's going to sustain it? Has all the bad news really been factored in (commercial real estate, retail, spending, credit cards?). The damage to the economy has been so bad...hard to believe we'd only get one bottom...

 

[ziggy29]

Yes -- but once the market recovers somewhat, I will be reducing my AA to somewhere around 55/45. I've been at 70/30 and I'm not going to sell unless/until we get back close to 70/30 -- but at that time I will ratchet back the AA a bit.

I just sunk a large portion of my fixed income into TIPS yesterday, and I suspect that will be buy and hold until they mature in 2025...

 

[kumquat]

But I just don't see the case for stocks going up 8-10% a year for the next 10 years.

-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.

 

[Notmuchlonger]

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.

 

[DblDoc]

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.

Your rebalance trigger points!

DD

 

[Notmuchlonger]

Your rebalance trigger points!

DD

Wow so easy a caveman could do it

 

[DblDoc]

-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

 

[harley]

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.

 

[freebird5825]

"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.

 

[slazenger]

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.

 

[Meadbh]

Don't worry. We'll also be watching carefully and we'll get back in before it jumps 30%.

You'll need this, then....

 

[Architect]

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.

 

[FUEGO]

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?

 

[charlie]

Would I still buy and hold? Yes ....... for the time being anyway.

Cheers,

charlie

 

[Darryl]

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.

 

[freebird5825]

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...