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Thread: Buy and Hold

  1. #25

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    Default Re: Buy and Hold

    The "buy an index fund today no matter what the price and hold it" group will probably call this a flash in the pan.

    Actively managed stock funds did a better job relative to index funds in last year's stock-market rally than they did in the previous year's market rout.
    Attachment 7877

    http://online.wsj.com/article/SB1000...064402716.html

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  3. #26

    Default Re: Buy and Hold

    Agree with Birch on this one. Bullitt - you're a wealth of knowledge and I'm sure much more sophisticated on investing than I ever will be, but I'm not convinced market timing the TSP is better than buy and hold. Let's see ... in 2008 the S&P index had about a -37% return and in 2009 it returned roughly 26.5%. What was your return in TSP during those years? Did you beat the index using market timing strategies? I'm not trying to throw spears, but you're claiming that buy and hold doesn't work and that timing is better. Can you reliably predict what will happen in the future? If so, then on March 9, 2009, you would have told everyone on this MB to buy, becasue the S&P was at it's lowest point in 10 years. And on Oct 12, 2007, you would have told everyone to seek refuge to the G, but you didn't and most of the timers didn't either. That's no fault of yours, it just goes to show that despite all the technicals, you can't predict the future of the markets.
    “This is my commandment, that you love one another as I have loved you.”
    John 15:12

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  5. #27

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    Default Re: Buy and Hold

    Quote Originally Posted by DCRanger View Post
    Agree with Birch on this one. Bullitt - you're a wealth of knowledge and I'm sure much more sophisticated on investing than I ever will be, but I'm not convinced market timing the TSP is better than buy and hold. Let's see ... in 2008 the S&P index had about a -37% return and in 2009 it returned roughly 26.5%. What was your return in TSP during those years? Did you beat the index using market timing strategies? I'm not trying to throw spears, but you're claiming that buy and hold doesn't work and that timing is better. Can you reliably predict what will happen in the future? If so, then on March 9, 2009, you would have told everyone on this MB to buy, becasue the S&P was at it's lowest point in 10 years. And on Oct 12, 2007, you would have told everyone to seek refuge to the G, but you didn't and most of the timers didn't either. That's no fault of yours, it just goes to show that despite all the technicals, you can't predict the future of the markets.

    True that you can't precisely predict the future of the markets, but if you can at least minimize losses during downturns instead of suffering the full brunt of them, then I think it's a challenge worth taking on. Not to say that it's easy, but if you want to grow your wealth, then I think being involved and strategizing to the best of your ability is a good approach. They don't call them "lost decades" for nothing. JMHO
    100 G COB 06/02/21


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  7. #28

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    Default Re: Buy and Hold

    Buy and hold works for TSP providing you DCA on the way down into the losers - you absolutely must buy shares on their lows - and that takes courage and an ability to absorb some pain. Afterall no pain no gain - just like in exercise.

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  9. #29

    Default Re: Buy and Hold

    Quote Originally Posted by Birchtree View Post
    Buy and hold works for TSP providing you DCA on the way down into the losers - you absolutely must buy shares on their lows - and that takes courage and an ability to absorb some pain. Afterall no pain no gain - just like in exercise.
    Birch,
    I've got to admit you're one of the very best ever. You have a knack for putting it exactly the way I like to hear it.

    But would you tell BridgewaterBetty -- this very same thing ??

    I know there is NO Doubt you would -- cause you tell it like it is.

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  11. #30

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    Default Re: Buy and Hold

    I can't believe we are even having this conversation.

    Buy & Hold is called WEALTH DESTRUCTION. When the S&P 500 was down 67% everyone and their mother threw B&H off the boat. How quickly we forget. DCA down all you want to BT, it won't mean a thing if it's worth zero.

    Buy and hold ONLY works with a good entry in a bull market because the upside potential is limitless, oh and you'd better hope that's the time you retire. However, the down-side potential is ZERO meaning you've lost it all you have nothing.

    From my blog. "Buying the S&P 500, if you spent 1,000 dollars on 24 September 1996 and sold on 6 march 2009, you'd have 955 dollars in your pocket." That's 12.5 years later...
    Attachment 7900
    Last edited by JTH; 05-15-2011 at 05:02 PM.

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  13. #31

    Default Re: Buy and Hold

    Absolutely

    Quote Originally Posted by Birchtree View Post
    Buy and hold works for TSP providing you DCA on the way down into the losers - you absolutely must buy shares on their lows - and that takes courage and an ability to absorb some pain. Afterall no pain no gain - just like in exercise.
    “This is my commandment, that you love one another as I have loved you.”
    John 15:12

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  15. #32

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    Default Re: Buy and Hold

    JTH,

    We all know it takes courage to hold the asset base when a decline is happening. My oceanic account gave me a $1M haircut by last November - but I held my ground and actually dumped another $800K into the market on the bottom - making over 400 individual purchases. Right now this account is less than $100K away from making a $1M gain off the March 9th lows - in 44 weeks. That works for me. I've taken over $70K in profit and reinvested that also - now it's tax time. Since June 26th I've made 671 individual purchases counting today. The more in the bigger the win. I've always used dividend reinvestment as a DCA during the tough times. Last November 90% of all stocks were below $10 and 80% of those were below $3 - so much potential for the brave and hoofhearted. Now I'm a margin player and seriously plan to make another $1M or two before 2010 closes. I know it's a sad story but that's all I have to say about buy and hold. You have to be prepared to use dollar cost averaging when it stinks to high levels. Last summer I bought 45 toxic waste stocks in banks and finance - sure glad I did that, too.

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  17. #33

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    Default Re: Buy and Hold

    Quote Originally Posted by DCRanger View Post
    Agree with Birch on this one. Bullitt - you're a wealth of knowledge and I'm sure much more sophisticated on investing than I ever will be, but I'm not convinced market timing the TSP is better than buy and hold. Let's see ... in 2008 the S&P index had about a -37% return and in 2009 it returned roughly 26.5%. What was your return in TSP during those years? Did you beat the index using market timing strategies? I'm not trying to throw spears, but you're claiming that buy and hold doesn't work and that timing is better. Can you reliably predict what will happen in the future? If so, then on March 9, 2009, you would have told everyone on this MB to buy, becasue the S&P was at it's lowest point in 10 years. And on Oct 12, 2007, you would have told everyone to seek refuge to the G, but you didn't and most of the timers didn't either. That's no fault of yours, it just goes to show that despite all the technicals, you can't predict the future of the markets.
    Hmmm, DC, not sure how long you've been observing, but I can tell you I ended up a few percent on the right side of 0 in 2008, by timing, and I also ended up a few % to the positive in 09, by being too conservative on my timing. Over 2 years time, I did not go in the hole and had nothing to recoup from 08. So this year is a clean slate for me, I can finally go in the hole, or I can actually keep gaining a bit. Just think if you lost 50% in 08, and gained 50% back on your residual 50% in 09, you'd still be 25% deficit from where you started at end of 07. or something like that anyway, you still wouldn't be back to your original level-that's just with the cash you started with, never mind the new inputs. I didn't lose on my DCAs either, since they were going into G until I decided to put those funds elsewhere. that way I know exactly the % gain or loss I have at any one time. My goal in this bear market is not to lose. gaining anything on top is icecream.
    "life can only be understood backwards, but it must be lived forwards" - soren kierkegaard

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  19. #34

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    Default Re: Buy and Hold

    Quote Originally Posted by DCRanger View Post
    Let's see ... in 2008 the S&P index had about a -37% return and in 2009 it returned roughly 26.5%. What was your return in TSP during those years? Did you beat the index using market timing strategies? I'm not trying to throw spears, but you're claiming that buy and hold doesn't work and that timing is better. Can you reliably predict what will happen in the future? If so, then on March 9, 2009, you would have told everyone on this MB to buy, becasue the S&P was at it's lowest point in 10 years. And on Oct 12, 2007, you would have told everyone to seek refuge to the G, but you didn't and most of the timers didn't either. That's no fault of yours, it just goes to show that despite all the technicals, you can't predict the future of the markets.
    Great way to make an entrance DC Ranger. I don't know when I've ever claimed to be a market timer, LOL, nor do I think anyone on this site would label me as one. I'm not going to say names, but it's pretty easy to figure out who you should be directing any market timing questions to by looking to see who leads the league in IFT's on the tracker.

    I sure don't have the holy grail in my pocket but there are many systems out there that allegedly do. This MB is a wealth of knowledge and if you don't feel you know enough, there are more than enough threads to sift through at your leisure.

    A quick executive summary for you.... The buy and hold debate is kicked around here quite frequently with some of us taking up both sides of the argument at times. Anyone who bought stocks 10 years ago and held on any longer than 2001 is underwater both before and after inflation.

    To me, buy and hold is like someone saying, "My destiny is written, why bother" and then proceed to sit on the couch and play with their Wii all day. Misery loves company, and many a buy and holders who piled in during the late 1990's when stock markets saw record inflows would love to see you do the same thing.

    It always seems that buy and holders are "buying low". It reminds me of a car salesman or a housing Realtor telling me that 'now is a good time to buy', 365 days a year.

    JTH, nice post. You summed it up.

    Re: DCA. If you're buying every other week, then how is that buying at a good price? I consider TSP contribution opportunity investing. You invest the money when you get it with no regard for what price you pay for them.

    The secret to success in the markets means you absolutely must
    1. Get in at a good price
    2. Catch the big Uptrends
    3. Miss the big downtrends
    4. Ring the bell at a good price

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  21. #35

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    Default Re: Buy and Hold

    The problem with investing psychology is that humans often project recent history into the distant future. Example: The market is up after a tumultuous bear crash so that could only mean one should never sell because at this rate, they'll be at new highs by Summer 2010.

    Hey, anybody heard any bearish predictions for 2010 yet?

    Here is a link to an old post of mine, Buy and Hold Thoughts. It's a collaboration of thoughts I've come up with after reading many books, academic papers, and blogs on everything from day trading to stocks for the long run.

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  23. #36

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    Default Re: Buy and Hold

    From the great one.

    Quote Originally Posted by 350zCommTech View Post
    Couple lost more than a 1/3 of their nest egg. They invested in the L2040. Their strategy was buy/hold and DCA.
    Disciplined savers who still took a hit

    This young couple thrived by investing in target-date funds in their retirement accounts. Then came the crash.


    The Zee family Stacey, 35, And Nathan, 39 Arlington, Va.



    Goals

    • Retire in about 20 years

    • Pay off their mortgage before retiring

    • Save money for college
    Assets

    • $355,000 in retirement plans

    • $221,000 in home equity

    • $250,000 in other accounts

    • $50,000 in emergency savings

    Stacey, 35, And Nathan, 39 Arlington, Va.



    (Money Magazine) -- Nathan and Stacey Zee have always been good with money. Diligent savers since their early twenties, the young Arlington, Va. couple used to hold monthly budget meetings - just the two of them - to review their spending and investments.
    These days, Nathan, 39, e-mails Stacey, 35, a summary of their investments once a month, and the two, who both work for the government, discuss their goals annually, around the date of their wedding anniversary.
    One reason they're so disciplined is that they've kept their investing plan remarkably simple. They invest exclusively through low-cost target-date funds because the Zees view these all-in-one portfolios as the easiest way to maintain their asset-allocation strategy. It's no wonder the couple had managed, at one point, to amass nearly $500,000 in their nest egg.
    Unfortunately, discipline and simplicity couldn't protect them from last year's crash, which wiped out more than a third of their investments.
    The pair haven't lost faith in the market, though Nathan admits, "If I needed this money anytime soon, I would be really stressed out." Yet with their first child on the way, college savings to consider now and hopes of retiring in around 20 years, the Zees want to know if they need to re-examine their goals and strategies.
    http://money.cnn.com/2009/02/18/retirement/makeover_savers.moneymag/index.htm?postversion=2009021904


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