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Monday, August 08, 2005

Saying Goodbye to Buy-and-Hold

Today, I ended up reading some articles about buy and hold strategy. Actually, on articles, saying that buy and hold is not going to produce satisfying returns.

Gregg Greenberg at writes:
One such pro straying from the conventional wisdom is Jeff Knight, portfolio manager for the Putnam Asset Allocation Growth and Putnam Asset Allocation Balanced funds. Knight is forecasting a long-term, low-return world in which traditional buy-and-hold investing will not produce the kinds of returns to which American investors have grown accustomed over the past half-century.

Instead, Knight believes the best strategy for beating the indices going forward is to shuffle nimbly between asset classes and world markets.
Roger Nusbaum comment on Knight's viewpoint:
While I am not sure the extent to which I agree with the better returns through more trading, the argument is compelling and it is worthwhile to think about what you should do if we are going to have below average returns for a while to come.

More active trading, if you're good at it might make sense but I do not think this is easy for most people.
Jack Rothstein reveals his plans for near future:
Considering the current market and the action it displays, the ability to pick stocks is critical to achieve positive performance. This is a stock pickers’ market. The major averages are providing inadequate returns. The performance of the DOW has been a drag. Look at the tape and see the reality. Small and mid-cap stocks are making new highs. That is where the leadership is. That is where the money is being made during the current trend.
Nasdaq is cooling off a little and I agree that one shouldn't make too big bets on the rise at the moment. At least until Nasdaq manages to break the new minor downtrend. I don't suggest stock-picking, but just maybe staying off some days.

See also: Saying Goodbye to Buy-and-Hold
Random Roger's Big Picture: "Saying Goodbye to Buy-and-Hold"
Jack Rothstein: Longs and Shorts


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Anonymous Penny Stock Trading said...

I have never been a great fan of buy and hold for ever and ever Their are stocks like petsmart that traded at 2 dollars a share 11years ago now the stocks almost fifty. Also pricesmart traded at about 7 dollars a share about seven or eight ago now its almost around sixty dollars. Their are many other examples Apple computer traded ar only 5 dollars a share in 1998 now its over 400. These stocks are being held quite a long time generally speaking. I would say four to seven years would be about right as far as buy and hold go. I have a website where I have been following stocks under five dollars. I generally hold my stocks anywhere form 2 to 7 years.

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