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Is Buy & Hold Still a Valid Investment Strategy?
This piece begins in July 2000 when I wrote:
Today is the "Buy and Hold Strategy" for investing still viable?
Forever it seems we have seen the markets rise. Buy a stock, and if you did your homework, the company was sound and had a good business model, chances were fairly good that your stock's price would rise in value over time. It was easy pickings.
Today, that practice is growing more difficult. Who knows what twists and turns our technology will take? Today's successful companies are tomorrow's flame-outs.
Remember Amazon.com referenced above in July, 2000? Then it was at 41 3/16. The last available quote of March 23, 2001 is 10.81. Are you still holding Amazon? Why? Or, worse, are you buying in the hopes that it is now a "bargain?"
Everyone is complaining that their stock holdings have lost money. Pensions, Mutual Funds, all down. IRA's, 401K's -- the money we all planned to retire with is disappearing into the brokers and analysts pockets.
Why do we still hear the word "bargain" when an analyst is talking? Who are they kidding? It is a crime the way the gullible public has been played for a fool, enticed into the markets while they were hugely over bought. Why are analysts afraid to say "bear market?" Remember who pays their salaries -- brokerages, huge companies like PaineWebber, Smith Barney. Their holdings are affected by what the analysts say and do, and it is in their best interests for them to keep it light. Keep the public buying. We need the dollars in the market. Do whatever it takes to keep people from pulling out of the market.
Doom and gloom talk is not good for their employers and it is not good for America.
So what's the simple answer? Short-term strategies applied to long-term holdings. Most brokers are not savvy about following the market. They are recommending stocks their companies tell them to recommend.
Learn to do your own homework. With today's technology and inexpensive data, you can learn some easy techniques for knowing when your holdings are no longer worth keeping. Get out, make profits, get back in when the time is right.
|1-2-3 Profits, Explaining Method Popularized by Ken Roberts|
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