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Thread: Buy and Hold

  1. #13

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    Default Re: Buy and Hold

    The easiest way to build long-term wealth is to extend one's time horizon, be a contrarian, and compound dividend yield. I have followed these principles while building my base and now that I've arrived I plan to pistol shoot my way to even greater gains taking opportunity of market volatility. So this buy and holder of many years is and has been preparing to enter the bull ring of the timer to collect my greedy share. I won't be a day to day trader but rather a position swing trader. My advice is to learn before you churn - because the potential in this type of market is enormous in both directions.

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  3. #14

    Default Re: Buy and Hold

    Quote Originally Posted by Birchtree View Post
    The easiest way to build long-term wealth is to extend one's time horizon, be a contrarian, and compound dividend yield. I have followed these principles while building my base and now that I've arrived I plan to pistol shoot my way to even greater gains taking opportunity of market volatility. So this buy and holder of many years is and has been preparing to enter the bull ring of the timer to collect my greedy share. I won't be a day to day trader but rather a position swing trader. My advice is to learn before you churn - because the potential in this type of market is enormous in both directions.

    Learn before you churn! I like that.

    YM

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  5. #15

    Default Re: Buy and Hold

    The more I learn, the more I think investing strategies are a matter of "belief". Either you believe you can beat the market or you don't.

    I believe I can't. Most TSPTalkers believe they can.

    However, for those who aren't sure (or are losing their confidence in this market), this 2004 Money article may prove interesting.

    I particularly liked the assertion that many institutions, like individual investors, select money managers by "hire high" and "fire low" criteria.

    http://money.cnn.com/2004/02/19/maga...0403/index.htm

    In addition, John Bogle suggests that foreign bonds should be part of a long-term portfolio. He argues that we can't be sure that the U.S. will be on top 20 years from now. Unfortunately, foreign bonds are yet another asset class - along with REITS, Small Value, Small Foreign, and Emerging Markets - not offered by TSP.

    The TSP board is somewhat schizophrenic. They want us to passively invest according to the Efficient Market Hypothesis. However, they don't offer enough asset classes to make it really effective.-----Jim

    Incidentally, my Quicken projected return for 2008 is -70%. So what do I know!

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  7. #16

    Default Re: Buy and Hold

    The link outlines the five essentials to investing: http://investingessentials.blogspot....ing-sense.html

    The following is an excerpt. My comments are in italics.

    "Here are the five investing essentials necessary to successfully use the portfolio investment method. Note that these essentials are necessary for any long term investing strategy, with one exception: The portfolio selection method requires the use of mutual funds because of their advantage in getting full diversification, which is almost impossible using individual stocks.


    1. Decide on an asset allocation that fits your needs. Asset Allocation is simply the percentages of your money you plan to place (allocate) into stocks, bonds and cash. It determines most of your investing risk.

    Your TSP stock allocation should include all three TSP equity funds, i.e. C, S, & I, and approach the world market capitalization - 50% domestic and 50% international.

    2. Diversify your holdings. Diversify means placing some money in different kinds of mutual fund investments in order to spread your risk and take advantage of Markowitz's discovery.

    Diversify among cash (G Fund), bonds (F Fund), and equities (C, S, & I) funds.


    3. Keep costs as low as possible. Whatever you spend on buying and maintaining your investments comes directly out of the returns you receive.

    Fortunately, TSP has the lowest cost funds available.


    4. Rebalance your portfolio when necessary. Your portfolio is like a file folder - it contains all your various investments. Rebalancing is simply readjusting your allocation percentages back to where you originally set them. They will get out of line from time to time because of increases or decreases in your different kinds of investments.

    Rebalance to maintain a constant level of risk. If you let your allocation drift, your risk profile will change. Investors that let their allocations drift as the C fund produced out sized returns got zapped in 2000.


    5. Formalize your investment plan. Developing a plan and then writing it down is a way of demonstrating your commitment. It also serves as a compass to insure you stay on course.

    Keeps you from panicking and changing your risk/return profile.


    That's it. Note that these essentials aren't going to involve something you can't follow. There is no need for "Wall Street" language or complicated strategies. The essentials are all you really need to invest effectively and get higher-than-average returns.

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  9. #17

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    Default Re: Buy and Hold

    Buy and Hold is Dead!
    On an individual basis, the sad reality is most funds simply want to beat their target benchmark. To do that they frequently feel they must be fully invested 100% of the time. Then by throwing out a few obvious dogs and overweighting a few top performers, managers can beat their target.
    Steve noted his "best of the best" diversification strategy beat the market by a few percent. Unfortunately, on an absolute Return basis, -35% is a horrible year no matter what the benchmark is. Note that the -38.5% decline in the S&P wiped out all gains for the last 12 years.
    http://globaleconomicanalysis.blogsp...ds-coffin.html

    Long Live Buy and Hold!
    Successful market timing requires three key ingredients: a reliable signal to tell you when to get in and out of stocks (or bonds, gold and other types of investments), the ability to interpret the signal correctly and the discipline to act on it. The popular image of market timing is that it calls for making drastic, all-or-nothing moves into and out of a particular market.
    In reality, many timers adjust their investments in stages, and their recommendations don't always reflect such a black-and-white view of things. And while some timers may trade frequently, others use signals that rarely change from buy to sell or vice versa. In any case, timers say that being out of the stock market during its most uncertain periods results in a smoother ride for your portfolio compared with a buy-and-hold approach.
    http://finance.yahoo.com/focus-retir...buildingwealth

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  11. #18

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    Default Re: Buy and Hold

    Michael Covel fired this off at a reviewer of Trend Following at Amazon.com. Some sorry reviewer claimed to be a buy and fundamental Warren Buffet investor. Ha. Unless you're an insider, you're not trading on fundamentals.

    One of the original Turtle Traders, I'd love to see Covel cross horns with a boglehead.

    I welcome any reader who wants to raise the flag of 'buy and hope', 'die and hold', etc., whatever phrase one wants to call the nonsensical strategy of 'buy and hold'. Bottom line, right at the time the baby boomers are retiring buy and hold has been exposed as perhaps the biggest Ponzi scheme ever. How much did millions pay in fees to the big mutual funds to receive no return over the last decade? Billions of wasted money. And yes, Warren Buffett deserves all of the accolades for building a successful multi-national firm, but stop pretending he got rich simply by buy and holding. That is simply flat out not true. If one is a buy and hold investor, or used to be one, they should read carefully a point of view (trend following) that has long escaped the mainstream. It is no time to keep drinking the Kool-aid. And while I appreciate you taking the time to offer a review, ignoring facts simply because you feel your hero was denigrated is transparent.


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  13. #19

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    Default Re: Buy and Hold

    Another challenger to Bogle's buy and hold index funds scheme. I would really like to see this in real life.

    My $100,000 challenge to John Bogle
    https://www.scminvest.com/pdf/newsletters/3Q09.pdf

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  15. #20

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    Default Re: Buy and Hold

    Don't think we're done yet, guys and gals.

    http://dshort.com/charts/mega-bear-2...-2000-extended

    "life can only be understood backwards, but it must be lived forwards" - soren kierkegaard

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  17. #21

    Default Re: Buy and Hold

    Quote Originally Posted by Bullitt View Post
    Another challenger to Bogle's buy and hold index funds scheme. I would really like to see this in real life.

    My $100,000 challenge to John Bogle
    https://www.scminvest.com/pdf/newsletters/3Q09.pdf
    Quote from article...
    "If he has it his [Bogle's] way, a Federal Retirement Board will make your investment decisions for you. Doesn’t Mr. Bogle realize that shareholders in his index funds had their retirement plans decimated last year? Do you really want him guiding your investment decisions? Nothing personal, Mr. Bogle, but I think buy-and-hold has failed—it doesn’t work."
    Tom
    Market Commentary | My Blog | TSP Talk Plus | |

    I am not a Registered Investment Advisor. Do your own due diligence.

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  19. #22

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    Default Re: Buy and Hold

    Quote Originally Posted by Bullitt View Post
    Another challenger to Bogle's buy and hold index funds scheme. I would really like to see this in real life.

    My $100,000 challenge to John Bogle
    https://www.scminvest.com/pdf/newsletters/3Q09.pdf

    Great article. Needs to be forwarded over to Tracey Ray and Greg Long, and passed to the FTRIB. They seem ready to take on the free money challenge.

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  21. #23

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    Default Re: Buy and Hold

    I thought I read somewhere that John Bogle actually has quite a percentage of his money tied up in active fund management strategies. I highly doubt he took more than the average hit to his 401K that Joe the Plumber did.

    Index funds are great..... in a bull market. Yeah, yeah, I know, I'm buying shares at 'such great low prices' right now 'for the long haul'. Index funds work, I'm not doubting that one bit, but as long as you're all in at the bull and all out at the start of the bear you'll be just fine ignoring the small trends.

    Buy and hold has failed many, many investors but again, many investors believe it's the new vogue to switch out of those 'high cost mutual funds' and into 'low cost Index Funds'. It's such a simple and tempting concept to buy and hold an index so that in theory you'll never deviate from the market averages. My biggest problem with buy and holders is that they tell investors to "buy whenever you have the money to invest because in the long run it will be alright". Yeah. The long run is what they preach, but the short run matters more.

    How many savers piled their money into the L-2010 fund in 2007 when it sounded like a great idea in 3 years?

    No matter what investment vehicle you choose you absolutely have to

    1. Buy it at a good price
    2. Sell while the going is still good.

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  23. #24

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    Default Re: Buy and Hold


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