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Thread: Buy and Hold

  1. #73

    Join Date
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    Default Re: Buy and Hold

    Quote Originally Posted by JTH View Post
    DCA by nature is buy & hold and most folks don't change their contributions based on market conditions. If you're going to change your DCAs based on market conditions, then I wouldn't call that buy & hold, I'd call it timing the market. So are you telling me you're a market timer is disguise?
    JTH...

    I am not an honest 'Buy and Holder' - but, am normally relatively close...

    Changing – increasing contributions or changing the allocation ratios of contributions - of current contributions does not negate a 'Buy and Hold' strategy. Increasing ones contributions during a crash can be thought of as being the essence of a Buy and Holder. You are increasing the value of DCAs. Reducing your DCA at an unsustainable market top when you have other bills to pay also does preclude being a Buy and Holder. And, changing contribution ratios means very little.

    I would actually position that adjusting allocations in your holdings between a small number of allocation ratios - not exceeding a limiting swing (say 10% - 20%) - is not inconsistent with Buy and Hold. You are not really timing the market if you change current asset allocations a few points. You might not be a true invest and forget, but you are also not a trader.

    Buy and Hold does not mean you cannot adjust, it means that you do not believe that a person can consistently pick a top and a bottom, and thus are unwilling to make massive allocation swings to current holdings. To me, swing trading huge ratios between safety and growth is the indicator of a Market Timing approach.
    Lookin' up at the 'G Fund'!!!

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  3. #74

    Join Date
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    Default Re: 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.

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  5. #75

    Join Date
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    Default Re: Buy and Hold

    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.



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  7. #76

    Default Re: Buy and Hold

    First post since 2010!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! !!!!!!!!!!!!!!!!!!!!!

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  9. #77

    Join Date
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    Default Re: Buy and Hold

    Glad you found something of interest to you

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