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Is Buy & Hold Still a Valid Investment Strategy?

This piece begins in July 2000 when I wrote:

"Whatever happened to the work ethic of our fore bearers? Great minds of the past such as P.T. Barnum, J.P. Morgan? Men who made their money the old fashioned way, "They earned it."

"TRADING: HARD WORK + DISCIPLINE = SUCCESS

"Today's mantra: "Get rich quick," "Easy money," "Who Wants to Be a Millionaire?" Who is not sold on the idea of something for nothing? Game shows are popular as they cater to the idea of easy money; just answer a few trivia questions, "Hey, I know that one," "I could do that." It gives the easy money mentality hope and a promise of a better life, without effort.

"But people, please, take off your rose colored glasses and look around. This market has gone too far, too fast. Explore the possibility that the markets are still far over bought; Internet company valuations are out of control.

"When we have so called "hugely successful" companies hemorrhaging millions of dollars every quarter, something is terribly wrong.

"BUSINESS MODEL: NO PROFIT + HIGH COSTS = TROUBLE

"How long can a company continue to lose money yet stay in business? We may soon find out. Case in point, Amazon.com, whose business model is based on selling goods at less than cost. I note that in the last 52 weeks, Amazon (AMZN) has gone from a high of 113 to a low of 32 15/32 with the current value (as of July 17, 2000) at 41 3/16.

"Are you one of the Amazon stock owners who recognized the downturn and sold at a nice profit somewhere around 113? What about 95? 87? Anywhere? This is where learning short-term trading strategies will pay off for longer-term traders."

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  More Tips
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