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Buy And Hold - Boring And Outdated Way To Invest?
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ArtfulDodger
Fellow Investors:
I am not a trader — but neither am I a buy-&-hold investor. I find both philosophies untenable and illogical.
People who want to trade should trade futures, because of the leverage. It’s just not reasonable to trade stocks with very little to no leverage, when futures provide you with an abundant amount of leverage.
People who buy-&-hold are hanging onto a philosophy created when taxes were 75% to 92% and transaction fees were nothing short of punitive. Neither is the case today.
With transaction fees as much as 1/50th of what they were thirty-years ago and taxes 80% or more less than what they were, the buy-&-hold strategy is entirely uncalled for and illogical.
Stocks that don’t perform when others in their sector are rising — notwithstanding their dividend — or stocks that head south when others are rising ought to be dumped. Winners should be held — and they should be allowed to run as far as the owner dares.
In my case, there is one exception. I may build a position in a stock during or directly after a crash, and I may hold and continue to buy it, because I believe I have correctly figured that the chance of the company coming out of the downturn in excellent shape is much greater than the risk that it will not. I have currently been doing that with my 1st & 2nd largest holdings in my portfolio: SAN & NTES.
By this means, if you keep your losses cut short, it only takes a couple of speedy runners along with a few decent shows to give you really profitable portfolio.
Last, I always think of my portfolio first — never just one stock. It’s much easier to turn dogs out into the street with that attitude.
This is my own personal investing philosophy, having created it from experience and study of many successful investors. I think of it as pruning the deadwood and keeping the healthiest trees that I shall one day harvest.
For those of you who use other philosophies, I wish you the best. I'm certainly not pressing it on anyone, but this one has worked for me for over 40-years.
I remain, the ArtfulDodger
25 Nov, 07:39 PMReply
http://seekingalpha.com/article/2708795-buy-and-hold-boring-and-outdated-way-to-invest?isDirectRoadblock=false&uprof=51
