Thread: Buy and Hold

I would tell the Zees to stay the course - they didn't panic and sell or transfer at the bottom - they will do just fine. Keep the DCA going.

Originally Posted by Birchtree

I would tell the Zees to stay the course - they didn't panic and sell or transfer at the bottom - they will do just fine. Keep the DCA going.

I'll give you that BT, you won't tell them to sell

JTH,

My dollar cost averaging into my TSP account helped return me to my previous highs several months ago. An $8 C fund price was perfect - I only wished I'd have been able to get more of it back then on the lows. The lowest C fund price was $7.86 on March 9th. When you DCA every two weeks at these lower prices it doesn't take long to add the shares - and that is how money is made. Lots and lots of shares accumulated at low prices and now they are really working as we are into the $13 range. There have been many members that have done exactly the same thing and they are all fine and dandy. The secret is the DCA going after the lower prices. I've been maxed on my contributions for a long time. There is an advantage to being over fifty.

Bullitt, you make good points in your blog about buy/hold. I've been investing my pennies for over 25 years, trying to build a nest egg to retire with after leaving service in a couple more years. I've made plenty of bonehead decisions in that time. I took a beating in early 2000s and again during the recent crash, although I weathered the storm better this time due to DCA and better allocation. While I've DCAd almost religiously over the years, I've also jumped in and out of investments too often and at the wrong times. I've never used a broker or advisor. I learn from reading and watching others (non-media types) like all of you on this MB and I mean no disrespect to any of you. I applaud you for trying to help many of us navigate this messed up market. Don't get me wrong, I'd like to make as much $ as the next guy, but I honestly don't know of any system or technical data can reliably predict tops/bottoms. If that were the case, we'd all be filthy rich. So in the meantime, I'll focus on a proper asset allocation that meets my tolerance for risk and use a modified DCA approach, from the safety of a G-like fund.

Originally Posted by DCRanger

Bullitt, you make good points in your blog about buy/hold. I've been investing my pennies for over 25 years, trying to build a nest egg to retire with after leaving service in a couple more years. I've made plenty of bonehead decisions in that time. I took a beating in early 2000s and again during the recent crash, although I weathered the storm better this time due to DCA and better allocation. While I've DCAd almost religiously over the years, I've also jumped in and out of investments too often and at the wrong times. I've never used a broker or advisor. I learn from reading and watching others (non-media types) like all of you on this MB and I mean no disrespect to any of you. I applaud you for trying to help many of us navigate this messed up market. Don't get me wrong, I'd like to make as much $ as the next guy, but I honestly don't know of any system or technical data can reliably predict tops/bottoms. If that were the case, we'd all be filthy rich. So in the meantime, I'll focus on a proper asset allocation that meets my tolerance for risk and use a modified DCA approach, from the safety of a G-like fund.

I'd have to honestly say: You sound like one of the very smartest members we have.

You express yourself very well and there is no one that could really argue with what you're sharing. The FACTS are -- almost any serious investment firm or entity would caution against 'Market Timing'

More often than not -- they go in too soon or go out too soon and on the whole 'Market Timing' has proved to be an inferior strategy.

DCAing is absolutely undeniable - in it's value -- very hard to beat

The other thing about Staying PUT -- however you decide to invest is there is No Way you can ever miss a good day (all the unexpected ones) and the overwhelming odds are - Being More fully invested will put you way ahead of everyone else -- especially over the next few years.

I truely admire your ability to think things through and come to such a solid decision -- especially on somethng as important as Retirement.

Those that Stayed Put -- were the ones that rose to the TOP and stayed there.

For most of us -- it's more the challenge -- kind of an addiction and we always have to stay on our toes looking for the right opportunity. Where you have 'no worries' the longer you simply make your decision and let it ride.

I admire you -- I really do.

Well I've got a few more charts to catch up on and then heading to a hotel near by.

I've previously posted these comments somewhere on my thread. "Just a few months ago, experts were saying it would take years for ordinary people to recover the losses they suffered from the horrific stock market decline at the end of 2008 and beginning of 2009. But a new study from Fidelity indicates that many ordinary investors are quite well - as long as they didn't panic and kept putting money into the market. How is this possible? Mostly because the huge fall in the stock market created a buying opportunity of a lifetime. Investors who continued to contribute to 401(K) accounts and TSP were able to buy stocks and mutual fund shares at very low prices. When the market rallied, the returns poured in. It all goes back to a basic rule of retirement investing - it must be viewed as a long-term venture and should not be tinkered with in reaction to short-term market disruptions. And don't knee-jerk react ( like Jason does) and make decisions you'll regret in the depths of crisis times."

Birchy, we agree.

I maintained my allocation and rebalanced frequently all through the Time of Troubles. The initial fall-off-the-cliff was too abrupt to sidestep and I felt I had no choice but to stay put. (Remember those minus 500-point days?) My balance was decreasing as the shares devalued but I kept the same percentages by buying more shares. That way when they began again to climb, I gained at almost twice the pace at which I lost.

Now I have recovered almost all I lost, which ought to be true of most of us. I don't see how more than a hundred of us were beaten by ALL the funds in 2009. (See the tracker.)

Originally Posted by jimijr

I don't see how more than a hundred of us were beaten by ALL the funds in 2009. (See the tracker.)

If buy and hold is a long term thing, defined by 20+ years, then who cares about one year? If we're talking about one year, then how did buy and holders do in 2008?

Look, I'm not an advocate for market timing in a sense that you never should lose money in the market. There will always be drawdowns. I'm in between here- meaning, I want to catch the big trends which in theory should take minimal trading. So, yes, many folks find my style boring- almost as boring as buy and hold because my moves on the tracker don't provide enough 'action' and 'excitement' for them. This isn't a casino game it's real money we're playing with here. From what I've read, and from some experience, I've just found that overtrading is contagious and problematic for most investors. Now, we've got some savvy folks on this board who made 24 IFT's this year and I really wish some of those 'top timers' would post more because I'd love to hear their investing psych, but what can you do? Unfortunately, and I'm not afraid to admit, I got caught up in all the bullish nonsensical forecasts and bullish timing models in 2007, only to get a beat down in the process. I see the exact same thing happening here right now on this MB.

Buy and holders: Where were your posts convincing the masses who frequent this board to stay the course in the months of February-April? Besides Birch who has been talking the same game from the top in Nov 2007 until the bottom in March 2009, I don't recall too many people pumping the buy and hold theme when we were talking of a nationalization of the banking system.

My posts aren't intended to stoke a debate as to whether buy and hold is inferior or superior to trading, but more to see both sides of the story. The Mutual Fund industry and Wall Street Machine has ingrained in our minds that we need to buy and hold. Do you think Vanguard cares how investors do? Hell no they don't care. All they want is your fees, albeit small, to fill their coffers yearly when you invest in their index funds. Once you understand that no matter what side of the debate you decide to choose that- at the end of the day, its the broker or fund company who wins- may one finally be at peace with his or her decision.

Excellent points there Bullitt. Let me tell you a story. Back in 2000 I had a majorly dull and boring portfolio - there was absolutely no technology in there. So one day my Merrill broker (office manager at the time) calls and tells me to allow him to put me into some technology stocks so I could make money like everyone else. I knew the market was nothing but fluff at the time - so I told him no thankyou and reminded him that every dog sooner or later has his day. When the market broke I survived just fine and went on to add to my boring portfolio for the next several years. I was very, very careful with my buying going into the 2007 highs because the Fed was trying to destroy the housing market. When we dropped heavily into the summer of 2008 I started to open up the gates and bought many banks on their lows after selling most of my commodity stocks to raise cash. Into the fall I was feeling a $1M haircut but realized this also was temporary so I refused to sell any of my asset base - but instead dumped multi-hundreds of thousands of dollars down the rabbit hole buying everything I could. My Merrill broker called and suggested I sell everying at the bottom. I told him "that was the GD stupidest thing I ever heard". I can tell you I created a shock and awe in that office and the soda jerks couldn't stand me - how could I be so stupid - didn't I know the world was ending. So I began the process of moving my account to BAC and now BAC owns Merrill. Anyway I just rode the first several months off the March bottom with my asset base intact and started serious buying again at the end of June. And now I'm only $42K away from a $1M gain in 45 weeks. I bet the majority of my old soda jerk clients are still in cash or bonds. The morale of this story is to educate oneself and do it yourself - yes it takes time, lots of time. But I've spent many years and cycles and perhaps a few good folks might benefit from this old dogs experiences. I tell it like I see it.

Originally Posted by Bullitt

.....Buy and holders: Where were your posts convincing the masses who frequent this board to stay the course in the months of February-April? Besides Birch who has been talking the same game from the top in Nov 2007 until the bottom in March 2009, I don't recall too many people pumping the buy and hold theme when we were talking of a nationalization of the banking system.....

I can only speak of myself - an often times lonely B&H TSPer on this Message Board. I don't feel the need to try to convert any other TSPer into DCAing every other week for the long haul. I've stated before that Buy & Hold is best for me - I freely admit I'm no market wizard, and have neither the time nor the inclination to commit to any routine market timing. For my personal level of risk tolerance, Buy & Hold makes sense.

I stayed the course during the months of Feb-Apr, and said as much. I was happy to buy cheap shares and wouldn't lose any sleep if the market went back down for the next few years. But my personal situation is just that - mine. My financial dynamics aren't the same as everybody elses, and neither are my expectations of what the TSP will provide me down the road.

For the market timers that are successful - great! My hat is off to them. I offer no snide comments or wish to denigrate their investing style. Funny thing is, I don't recall too many market timing TSPTalkers who sufferred dismal performance in 2009 laying bare their stats, or saying "Hey guys - I really missed the boat last year! I got out in March at the bottom and never got back in..."

Rather, I recall a lot of folks continued to beat the "massive correction is near!" drum as a way to validate their particular investing decision to time the market by sitting on the sidelines during a spectacular run. From my soapbox, the Buy & Hold crowd doesn't feel the need to preach to the masses at every opportunity.

To each their own - in the end it's their money. It's just smacks a tad arrogant when some equate Buy & Hold to "wealth destruction." The same moniker could very well be applied to various market timing approaches. For some it's successful, for others not so much. I'm just happy folks are saving money in the TSP...

What is someone who tries to trade within three Goldilocks allocations?

One when the big trends demand capital preservation.
One when everything looks ok to kinda good.
And, one when the bulls are running

Now, 2008 and 2009 were very different beasts. But, they were Once-In-A-Lifetime events. You could see a rather scary downturn by late 2007. Not a crash, just a sizable correction. Instead, we crashed - but, allocating to capital preservation became the equivalent of DCAs if you remembered that a crash is not permanent in America. Additionally, reading BirchTree's posts reestablished the power of DCAing to me. It became obvious that the crash was a DCA opportunity. Why not increase the pay period contributions and place it all in the stock funds. Yummy DCAs. And, who could miss the correction up.

The big down was visible, the big up was visible. You can move assets a bit in relation to those huge and visible transition and still be mostly a Buy & Holder at heart.

Now, its definitely time to go through trading withdrawls. Shaking. This is a more normal market. Shaking. Once in a lifetime should be history. I'm not smarter than the rest. Time to be boring.