Thread: Buy and Hold

Very true that people cannot pick a top and bottom. For example, I know many of the "top timers" got back in last week- at the same area they went to cash a month ago- missing the gains off the 'bottom of the correction'.

The whole point of timing the market is to be out during the big drawdowns without regard to trading or tax costs.

The whole point to buy and hold is to use weakness or regular contributions to build a position over many years.

I kept 20% in stocks because I'm not smart enough to call a top and have yet to find someone that can. Keeping 20% in is good enough to catch a wave if one forms from here and I'm still debating whether to go 100% cash position or not. I like the idea of keeping some in the game.

Great points everyone. I've been hearing only about 3% of folks are able to consistently beat the bull markets and half of that is by luck. However, with some simple long-term timing, you can easily beat the markets in the long run.

I've already said a straight buy & hold during 2000-2009 would yield you a 3.5% 10-year gain, if you IFT'd 10,000 on the first day of each month.

As an example, a 50/200 EMA crossover would yield a a 34.02% 10-year gain with a 3.4% yearly average. That slaughters buy & hold, and protects you during the Bear markets.

Now let's take it 1 step further using the same EMA crossover, only this time, I'll exit the markets completely during sell signals, save up the money (on the sidelines), then throw it all in on the buy signals and at the beginning of each month. I'll use the same 10,000 a month strategy I used before.

That would give you a 53% 10-year gain with a 5.3% yearly average. That's a total investment of 1.2 mil with an ending balance of 1,847,180.62 million over 10 years and I didn't even count the earnings you made while you sat in the G-Fund for 4.5 years.