This post is made of tweets I sent today earlier.
I saw a good piece today Buy and Hold is Wishful Thinking | Joe Fahmy The Next Big Move. Worth reading to many investors. It is taking a trader's perspective attacking good ol' Buy & Hold (B&H). I am not a diehard proponent, but I think one needs to recognize the strengths in the proper 'B&H approach', rather than pointing at the obvious flaws in a 'straw man B&H' created by the active crowd attacking something that does not exist. E.g. I have never seen someone using B&H forever and never rebalancing. Another key question to the creators of the 'B&H straw man' is 'buy and hold what?' So I thought why would I not bring more clarity here and show a good case for buy and hold?
Here is an example of B&H that many said stopped working. I call it "Lazy" My Portfolios - Lazy | tickerspy.com via @tickerspy $global $ETF. Actually this one shows no dividends and does no rebalancing.
Here is some more of Buy & Hold examples for the long term record - Lazy Portfolios - MarketWatch - Stock Market Quotes, Business News, Financial News - Invest Simple with Lazy Portfolios – MarketWatch.com
Here is how to build such portfolios - Invest Simple with Lazy Portfolios - MarketWatch - Stock Market Quotes, Business News, Financial News - Invest Simple with Lazy Portfolios - MarketWatch.com
Last but not the least feature - Keep Investing Very Simple, Then Enjoy Doing What You Love!
Good managers come and go, bad times come and go... Assuming humanity keeps going, consider $VT. It could be a sensible option for B&H when someone invests for ages and doesn't intend to touch an account (e.g. due to lack of skill and time to follow market). So I don't find it completely unreasonable to have at least 10% in a low cost total market index fund (like $VT or $VTI).
Can you do better than 'lazy'? Sure, you can enhance returns and cut your risk. It will take some time, effort AND discipline. It is simple, but not easy! You've got to do it smart.
...Relative strength (or momentum) would be one approach. It says, price is everything, buy high, sell higher. See sample here: tickerspy.com/portfolio.php?… via @tickerspy Just a 2010-2011 example. It returned less than $SPY but with less risk! AND it has been negatively correlated to $SPY lately! Consider it as a diversifier!
Another approach would be value investing - having a good margin of safety for a compelling asset. Buy low sell high. This requires even more research, patience and longer time horizon.
Neither will always work as you expect, so you have to be patient and follow a systematic approach with these strategies to get a boost to your returns. You will also be rewarded by reduced risk, as the two are negatively correlated.
How one could put all of this together? This is what Marathon Investor is about --> goo.gl/vE6GM
I saw a good piece today Buy and Hold is Wishful Thinking | Joe Fahmy The Next Big Move. Worth reading to many investors. It is taking a trader's perspective attacking good ol' Buy & Hold (B&H). I am not a diehard proponent, but I think one needs to recognize the strengths in the proper 'B&H approach', rather than pointing at the obvious flaws in a 'straw man B&H' created by the active crowd attacking something that does not exist. E.g. I have never seen someone using B&H forever and never rebalancing. Another key question to the creators of the 'B&H straw man' is 'buy and hold what?' So I thought why would I not bring more clarity here and show a good case for buy and hold?
Here is an example of B&H that many said stopped working. I call it "Lazy" My Portfolios - Lazy | tickerspy.com via @tickerspy $global $ETF. Actually this one shows no dividends and does no rebalancing.
Here is some more of Buy & Hold examples for the long term record - Lazy Portfolios - MarketWatch - Stock Market Quotes, Business News, Financial News - Invest Simple with Lazy Portfolios – MarketWatch.com
Here is how to build such portfolios - Invest Simple with Lazy Portfolios - MarketWatch - Stock Market Quotes, Business News, Financial News - Invest Simple with Lazy Portfolios - MarketWatch.com
Last but not the least feature - Keep Investing Very Simple, Then Enjoy Doing What You Love!
Good managers come and go, bad times come and go... Assuming humanity keeps going, consider $VT. It could be a sensible option for B&H when someone invests for ages and doesn't intend to touch an account (e.g. due to lack of skill and time to follow market). So I don't find it completely unreasonable to have at least 10% in a low cost total market index fund (like $VT or $VTI).
Can you do better than 'lazy'? Sure, you can enhance returns and cut your risk. It will take some time, effort AND discipline. It is simple, but not easy! You've got to do it smart.
...Relative strength (or momentum) would be one approach. It says, price is everything, buy high, sell higher. See sample here: tickerspy.com/portfolio.php?… via @tickerspy Just a 2010-2011 example. It returned less than $SPY but with less risk! AND it has been negatively correlated to $SPY lately! Consider it as a diversifier!
Another approach would be value investing - having a good margin of safety for a compelling asset. Buy low sell high. This requires even more research, patience and longer time horizon.
Neither will always work as you expect, so you have to be patient and follow a systematic approach with these strategies to get a boost to your returns. You will also be rewarded by reduced risk, as the two are negatively correlated.
How one could put all of this together? This is what Marathon Investor is about --> goo.gl/vE6GM
