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Thread: Buy and Hold

  1. #1

    Join Date
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    Post Buy and Hold

    Investments by age, using buy and hold.

    Don't know where I found this. But I thought it was worth sharing!

    1.
    AGE 26-45: AGGRESSIVE
    Now is the time to be brave. Invest in higher risk stocks with greater growth potential.
    100% in stocks
    0% in bonds
    0% in cash

    2.
    AGE 45-55: GROWTH
    These are the peak earning years. Broadly diversify your stock portfolio.
    90% in stocks
    10% in bonds
    0% in cash

    3.
    AGE 56-65: BALANCED
    The house is paid off and the kids are out of college; focus on higher – dividend – yielding stocks.
    60% in stocks
    30% in bonds
    10% in cash

    4.
    AGE 66-75 CONSERVATIVE
    High – dividend – yielding equities such as utility stocks are the way to go during the early retirement years.
    10% in stocks
    70% in bonds
    20% in cash

    5.
    AGE 76+ SHORT-TERM
    With no wages and a supersafe portfolio, your return starts to suffer and your savings begin to dwindle – but you should be OK with what you have left.
    0% in stocks
    10% in bonds
    90% in cash


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  3. #2

    Default Re: Buy and Hold

    John Bogle (Vanguard founder) suggests that you take your Social Security and defined benefit pension, e.g. FERS, into account when allocating your assets. For example:

    SS: $20,000
    FERS: $40,000

    $60,000 X 14 =s a $840,000 bond allocation. If you had $1,000,000 in stocks your total allocation would be:

    $840,000 + $1,000,000 = $1,840,000

    stocks: $1,000,000/$1,840,000 = 54%
    bonds: $840,000/$1,840,000 = 46%

    Taking SS and defined pension benefits into account allows an older person to take a more aggressive stock allocation than might be readily apparent from various rules of thumb, e.g. a bond allocation equal to your age.

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  5. #3

    Default Re: Buy and Hold

    Some Investing Concepts for Your Consideration

    1. Risk and return are related. Higher risk enables potentially higher returns. There are no low risk/high return investments. However, Fama/French have found that value stocks have higher returns and lower volatility (risk) than the market. Consequently, they claim that value stocks represent a different kind of risk. If so, the acceptance of higher risk to receive higher returns holds.

    2. Asset classes define assets with distinct risk and return characteristics.

    a. Equity: Large stocks, small stocks, value stocks, growth stocks, foreign stocks, and REITS

    b. Fixed income: domestic corporate bonds, government bonds, long bonds, short bonds, T-bills, foreign bonds, and cash.

    3. There are two basic investment approaches: active and passive. Active investors try to pick stocks and/or time the market. Passive investors focus on asset allocation, low cost, and obtaining what the market offers.

    4. Researchers have developed the theory of efficient markets - the Efficient Market Hypothesis (EMH). Essentially, in an efficient market it is fruitless to try and time the markets. At any given moment the price of a security incorporates all that is known about that security. Furthermore, it doesn't make sense to talk about the market being over priced or under priced. The current price is the best estimate of the current true price. Most of the research supports some kind (weak, strong) of efficient market.

    5. Active managers and investors believe that markets are not efficient and there are mispricings to be exploited, e.g. the market is under or over valued. Although active investors may concede that the S&P 500 or the total domestic stock market is efficient, they believe that global markets, especially emerging markets, and small stocks are not efficient and therefore, offer mispricing opportunities to be exploited. Ironically, the efficient market requires active investors to maintain its efficiency. Active investors use fundamental and/or technical analysis to attempt the discovery market inefficiencies.

    6. The returns of active managers can be primarily (95&#37 explained by the Fama/French Three Factor (FF3F) model, i.e. beta, the size premium, and the value premium. Consequently, the alphas achieved by some, if not all, active managers can be explained by asset allocation, not stock picking expertise

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  7. #4

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    Default Re: Buy and Hold

    I've discovered over the years that the majority of technical analysis is no better than a wind sock - but I still look at it. Though most of it is irrelevant bull hockey. I'll stick with my Ducati and ride the cycles I enjoy the thrills.

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  9. #5

    Default Re: Buy and Hold vs. Performance Chasing

    Here's a variation on the Callan Periodic Returns chart. I'm not sure I would adopt the Janus "diversified portfolio". However, I think the results are interesting.

    The diversified portfolio is always "average". Fortunately, it is never "terrible".

    https://ww3.janus.com/SiteObjects/pu...ic%20Table.pdf

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  11. #6

    Default The Case Against Market Timing

    The following quotes were posted by Taylor Larimore in the Vanguard Diehards forum. Taylor is one of the authors of the The Bogleheads Guide to Investing:

    As a former market timer, I learned that it pays to listen to investment authorities:

    "It's extremely rare to hear of anyone winning at it (market timing) over a period of years. Indeed, I've never heard of such a genius." Jack Brennan, Vanguard CEO

    "I never have the faintest idea what the stock market is going to do in the next six months, or the next year, or the next two." Warren Buffet

    "If I have noticed anything over these 60 years on Wall Street, is is that people do not succeed in forecasting that's going to happen to the stock market." Benjamin Graham

    "Forget about timing the market, it doesn't work. You'll lose money. Invest for the long haul and then sit back and wait--the market always goes up in the long-run." Paul Farrell, CBS Marketwatch

    "Market-timing is bunk." Pat Dorsey, Morningstar Director of Fund Analysis.

    "There will always be someone predicting disaster and someone predicting great fortune. At one time or another, each will be closer to correct than the other. But it won't matter to you if you understand this and have invested responsibly. You have a long-term plan; stick with it." Peter Lynch

    "The market timer's Hall of Fame is an empty room." Jane Bryant Quinn, Author, Columnist

    "Market Timing is a poor substitute for a long-term investment plan." Jonathan Clements, Wall Street Journal

    "Market timing is an ineffective strategy for mutual Fund Investors." CDA/Wiesenberger

    "The only way to make money with a (market timing) newsletter is by selling one." Malcolm Forbes

    "Nobody but nobody, has consistently guessed the direction of the bond or stock market over any meaningful length of time." John Markese, President, AAII Journal

    "I've learned that market timing can ruin you." Elaine Garzarelli, former Wall Street forecaster.

    "Among the 160 or so newsletters the HFD monitors, the market timing recommendations of only 10 have beaten the stock market over the last decade on a risk-adjusted basis." Mark Hulbert 1-18-01

    "As you can probably sense, we're not keen on market-timing. It just doesn't work." Morningstar's Course 106

    "Over a 12.5 year period, 224 of 237 market timing newsletters went out of business." indexfundsadvisors.com

    "I'm a strong advocate of buying and holding." Charles Schwab

    "Buy and hold is a very dull strategy. It lacks pizzazz and doesn't inspire much admiration at cocktail parties. It has only one little advantage: It works, very profitably and very consistently." Frank Armstrong, Author

    "For most investors the odds favor a buy-and-hold strategy." Carol Gould, New York Times

    "There is absolutely no evidence that anyone can time the market." Bill Bernstein, author and advisor.

    "Some people in the popular press talk about 'getting into' a bull market and 'getting out of' a bear market, but it is all marketing hype." Rick Ferri, Author and advisor

    "Only liars manage to always be 'out' during bad times and 'in' during good times." Bernard Baruch

    "It must be apparent to intelligent investors who if anyone possessed the ability to do so (market-time) he would become a billionaire so quickly he would not find it necessary to sell his stock market guesses to the general public." David L. Babson, famed investor

    "There is an overwhelming body of evidence to support the view that believing in the ability of market timers is the equivalent of believing astrologers can predict the future." Larry Swedroe, author and advisor

    "Don't trade in and out of funds. Stay invested.-- Not only does buy-and-hold investing offer better returns, but it's also less work." Eric Tyson, author Mutual Funds for Dummies

    "Investors should look with a jaundiced eye at any market timing system being peddled by its guru-creator" W. Scott Simon, author

    "Don't waste money subscribing to investment letters or expensive services.--Besides their cost, there is the problem that they are liable to tempt you into buying, and scare you into selling." Andrew Tobias, author

    "If you buy--and then hold--a total-stock-market index fund, it is mathematically certain that you will outperform the vast majority of all other investors in the long run." Jason Zweig, Money magazine

    "The facts suggest that successful market timing is extroardinarily difficult to achieve." Burton Malkiel, author of Random Walk

    "If we haven't said it enough, we'll say it again: Market timing is dangerous." Barron's Guide to Making Investment Decisions

    "Timing the market is for losers. Time IN the market will get you to the winner's circle, and you'll sleep better at night." Michael Leboeuf, author of "The Millionaire in You"

    "Stay the course. It is the most important single piece of investment wisdom I can give to you." Jack Bogle"

    Best wishes.
    Taylor

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  13. #7

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    Default Re: Buy and Hold

    They always are quick to tell you what their YTD or Monthly performance against the S&P is, but they'll never truthfully tell you what their 5 year 'Market Timing' Stats are. More often than not the I hear is, "I used to Day Trade."

  14.  
  15. #8

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    Post Re: Buy and Hold

    Thanks rokid for the posting!

    RE: http://www.tsptalk.com/mb/showpost.p...25&postcount=6

    How many of these rich guru's advised investors in 1999, early 2000 about the danger of the market bubble??

    Will accept all PM's......

    I got a bridge for sale! Also, some tech stock!

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  17. #9

    Default Re: Buy and Hold

    Quote Originally Posted by Birchtree View Post
    I've discovered over the years that the majority of technical analysis is no better than a wind sock - but I still look at it. Though most of it is irrelevant bull hockey. I'll stick with my Ducati and ride the cycles I enjoy the thrills.
    I thought windsocks were pretty reliable .
    Official Retirement Date: 06-31-2014!


  18.  
  19. #10

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    Smile Re: Buy and Hold

    Quote Originally Posted by SkyPilot View Post
    I thought windsocks were pretty reliable .
    Dang, Sky! how did you know the name of my past financial advisor at F^%$*&@#??.......

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  21. #11

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    Default Re: Buy and Hold

    Ya, I don't bunny hop every time the weather changes. Get ready for the second half - be right and sit tight.

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  23. #12

    Default Re: Buy and Hold

    So, are you "buy and hold" guys saying that this business of trying to move $$ between the TSP funds is crazy? Or is this about individual stock trading?

  24.  
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