Quote of the day
I’ve always been a believer in “Buy and Hold” and “Stocks For the Long Term.”
Enjoy the weekend,
Please, define “buy and hold”. If it’s nothing more than “buy and hope”, it’s a trap of monumental proportions these days. And in these days no balance sheet can be believed, so it’s better to not fall in love with any stock whatsoever. Dump any loser in a heartbeat, that’s what stop-limits are for and they should be set up immediately when the stock was purchased.
Wikipedia defines it as “a long term investment strategy based on the view that in the long run financial markets give a good rate of return despite periods of volatility or decline. This viewpoint also holds that market timing, i.e. the concept that one can enter the market on the lows and sell on the highs, does not work for small, or unsophisticated, investors so it is better to simply buy and hold.”
Yes, an individual stock, if that’s the makeup of your portfolio, should be dumped if its fundamentals change and it’s no longer appropriate for you. My investments are mostly indexed, S&P 500 most of that, so buy and hold is the literal sense for me. As I get closer to retiring, I’ll reduce the stock portion to 60%, and keep the 60/40 balance long term.
Honestly, I cannot fathom why someone would buy and hold on to it even when it falls significantly. With the trading cost being close to nil, if a stock appreciates again after being dumped, it can always be repurchased again. That’s the beauty of automated trades and trailing limits: market-timing at the reach of everyone even when one’s not looking.
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