Buy and Hold

Sort by newest Sort by date
Bullitt said:
Another challenger to Bogle's buy and hold index funds scheme. I would really like to see this in real life.

My $100,000 challenge to John Bogle
https://www.scminvest.com/pdf/newsletters/3Q09.pdf
Click to expand...
Quote from article...
"If he has it his [Bogle's] way, a Federal Retirement Board will make your investment decisions for you. Doesn’t Mr. Bogle realize that shareholders in his index funds had their retirement plans decimated last year? Do you really want him guiding your investment decisions? Nothing personal, Mr. Bogle, but I think buy-and-hold has failed—it doesn’t work."
 
I thought I read somewhere that John Bogle actually has quite a percentage of his money tied up in active fund management strategies. I highly doubt he took more than the average hit to his 401K that Joe the Plumber did.

Index funds are great..... in a bull market. Yeah, yeah, I know, I'm buying shares at 'such great low prices' right now 'for the long haul'. Index funds work, I'm not doubting that one bit, but as long as you're all in at the bull and all out at the start of the bear you'll be just fine ignoring the small trends.

Buy and hold has failed many, many investors but again, many investors believe it's the new vogue to switch out of those 'high cost mutual funds' and into 'low cost Index Funds'. It's such a simple and tempting concept to buy and hold an index so that in theory you'll never deviate from the market averages. My biggest problem with buy and holders is that they tell investors to "buy whenever you have the money to invest because in the long run it will be alright". Yeah. The long run is what they preach, but the short run matters more.

How many savers piled their money into the L-2010 fund in 2007 when it sounded like a great idea in 3 years?

No matter what investment vehicle you choose you absolutely have to

1. Buy it at a good price
2. Sell while the going is still good.
 
Agree with Birch on this one. Bullitt - you're a wealth of knowledge and I'm sure much more sophisticated on investing than I ever will be, but I'm not convinced market timing the TSP is better than buy and hold. Let's see ... in 2008 the S&P index had about a -37% return and in 2009 it returned roughly 26.5%. What was your return in TSP during those years? Did you beat the index using market timing strategies? I'm not trying to throw spears, but you're claiming that buy and hold doesn't work and that timing is better. Can you reliably predict what will happen in the future? If so, then on March 9, 2009, you would have told everyone on this MB to buy, becasue the S&P was at it's lowest point in 10 years. And on Oct 12, 2007, you would have told everyone to seek refuge to the G, but you didn't and most of the timers didn't either. That's no fault of yours, it just goes to show that despite all the technicals, you can't predict the future of the markets.
 
DCRanger said:
Agree with Birch on this one. Bullitt - you're a wealth of knowledge and I'm sure much more sophisticated on investing than I ever will be, but I'm not convinced market timing the TSP is better than buy and hold. Let's see ... in 2008 the S&P index had about a -37% return and in 2009 it returned roughly 26.5%. What was your return in TSP during those years? Did you beat the index using market timing strategies? I'm not trying to throw spears, but you're claiming that buy and hold doesn't work and that timing is better. Can you reliably predict what will happen in the future? If so, then on March 9, 2009, you would have told everyone on this MB to buy, becasue the S&P was at it's lowest point in 10 years. And on Oct 12, 2007, you would have told everyone to seek refuge to the G, but you didn't and most of the timers didn't either. That's no fault of yours, it just goes to show that despite all the technicals, you can't predict the future of the markets.
Click to expand...


True that you can't precisely predict the future of the markets, but if you can at least minimize losses during downturns instead of suffering the full brunt of them, then I think it's a challenge worth taking on. Not to say that it's easy, but if you want to grow your wealth, then I think being involved and strategizing to the best of your ability is a good approach. They don't call them "lost decades" for nothing. JMHO
 
Buy and hold works for TSP providing you DCA on the way down into the losers - you absolutely must buy shares on their lows - and that takes courage and an ability to absorb some pain. Afterall no pain no gain - just like in exercise.
 
Birchtree said:
Buy and hold works for TSP providing you DCA on the way down into the losers - you absolutely must buy shares on their lows - and that takes courage and an ability to absorb some pain. Afterall no pain no gain - just like in exercise.
Click to expand...

Birch,
I've got to admit you're one of the very best ever. You have a knack for putting it exactly the way I like to hear it.

But would you tell BridgewaterBetty -- this very same thing ??

I know there is NO Doubt you would -- cause you tell it like it is.
 
I can't believe we are even having this conversation. :mad:

Buy & Hold is called WEALTH DESTRUCTION. When the S&P 500 was down 67% everyone and their mother threw B&H off the boat. How quickly we forget. DCA down all you want to BT, it won't mean a thing if it's worth zero.

Buy and hold ONLY works with a good entry in a bull market because the upside potential is limitless, oh and you'd better hope that's the time you retire. However, the down-side potential is ZERO meaning you've lost it all you have nothing.

From my blog. "Buying the S&P 500, if you spent 1,000 dollars on 24 September 1996 and sold on 6 march 2009, you'd have 955 dollars in your pocket." That's 12.5 years later...
View attachment 7900
 
Last edited:
Absolutely:)

Birchtree said:
Buy and hold works for TSP providing you DCA on the way down into the losers - you absolutely must buy shares on their lows - and that takes courage and an ability to absorb some pain. Afterall no pain no gain - just like in exercise.
Click to expand...
 
JTH,

We all know it takes courage to hold the asset base when a decline is happening. My oceanic account gave me a $1M haircut by last November - but I held my ground and actually dumped another $800K into the market on the bottom - making over 400 individual purchases. Right now this account is less than $100K away from making a $1M gain off the March 9th lows - in 44 weeks. That works for me. I've taken over $70K in profit and reinvested that also - now it's tax time. Since June 26th I've made 671 individual purchases counting today. The more in the bigger the win. I've always used dividend reinvestment as a DCA during the tough times. Last November 90% of all stocks were below $10 and 80% of those were below $3 - so much potential for the brave and hoofhearted. Now I'm a margin player and seriously plan to make another $1M or two before 2010 closes. I know it's a sad story but that's all I have to say about buy and hold. You have to be prepared to use dollar cost averaging when it stinks to high levels. Last summer I bought 45 toxic waste stocks in banks and finance - sure glad I did that, too.
 
DCRanger said:
Agree with Birch on this one. Bullitt - you're a wealth of knowledge and I'm sure much more sophisticated on investing than I ever will be, but I'm not convinced market timing the TSP is better than buy and hold. Let's see ... in 2008 the S&P index had about a -37% return and in 2009 it returned roughly 26.5%. What was your return in TSP during those years? Did you beat the index using market timing strategies? I'm not trying to throw spears, but you're claiming that buy and hold doesn't work and that timing is better. Can you reliably predict what will happen in the future? If so, then on March 9, 2009, you would have told everyone on this MB to buy, becasue the S&P was at it's lowest point in 10 years. And on Oct 12, 2007, you would have told everyone to seek refuge to the G, but you didn't and most of the timers didn't either. That's no fault of yours, it just goes to show that despite all the technicals, you can't predict the future of the markets.
Click to expand...

Hmmm, DC, not sure how long you've been observing, but I can tell you I ended up a few percent on the right side of 0 in 2008, by timing, and I also ended up a few % to the positive in 09, by being too conservative on my timing. Over 2 years time, I did not go in the hole and had nothing to recoup from 08. So this year is a clean slate for me, I can finally go in the hole, or I can actually keep gaining a bit. Just think if you lost 50% in 08, and gained 50% back on your residual 50% in 09, you'd still be 25% deficit from where you started at end of 07. or something like that anyway, you still wouldn't be back to your original level-that's just with the cash you started with, never mind the new inputs. I didn't lose on my DCAs either, since they were going into G until I decided to put those funds elsewhere. that way I know exactly the % gain or loss I have at any one time. My goal in this bear market is not to lose. gaining anything on top is icecream.
 
DCRanger said:
Let's see ... in 2008 the S&P index had about a -37% return and in 2009 it returned roughly 26.5%. What was your return in TSP during those years? Did you beat the index using market timing strategies? I'm not trying to throw spears, but you're claiming that buy and hold doesn't work and that timing is better. Can you reliably predict what will happen in the future? If so, then on March 9, 2009, you would have told everyone on this MB to buy, becasue the S&P was at it's lowest point in 10 years. And on Oct 12, 2007, you would have told everyone to seek refuge to the G, but you didn't and most of the timers didn't either. That's no fault of yours, it just goes to show that despite all the technicals, you can't predict the future of the markets.
Click to expand...

Great way to make an entrance DC Ranger. I don't know when I've ever claimed to be a market timer, LOL, nor do I think anyone on this site would label me as one. I'm not going to say names, but it's pretty easy to figure out who you should be directing any market timing questions to by looking to see who leads the league in IFT's on the tracker.

I sure don't have the holy grail in my pocket but there are many systems out there that allegedly do. This MB is a wealth of knowledge and if you don't feel you know enough, there are more than enough threads to sift through at your leisure.

A quick executive summary for you.... The buy and hold debate is kicked around here quite frequently with some of us taking up both sides of the argument at times. Anyone who bought stocks 10 years ago and held on any longer than 2001 is underwater both before and after inflation.

To me, buy and hold is like someone saying, "My destiny is written, why bother" and then proceed to sit on the couch and play with their Wii all day. Misery loves company, and many a buy and holders who piled in during the late 1990's when stock markets saw record inflows would love to see you do the same thing.

It always seems that buy and holders are "buying low". It reminds me of a car salesman or a housing Realtor telling me that 'now is a good time to buy', 365 days a year.

JTH, nice post. You summed it up.

Re: DCA. If you're buying every other week, then how is that buying at a good price? I consider TSP contribution opportunity investing. You invest the money when you get it with no regard for what price you pay for them.

The secret to success in the markets means you absolutely must
1. Get in at a good price
2. Catch the big Uptrends
3. Miss the big downtrends
4. Ring the bell at a good price
 
The problem with investing psychology is that humans often project recent history into the distant future. Example: The market is up after a tumultuous bear crash so that could only mean one should never sell because at this rate, they'll be at new highs by Summer 2010.

Hey, anybody heard any bearish predictions for 2010 yet?

Here is a link to an old post of mine, Buy and Hold Thoughts. It's a collaboration of thoughts I've come up with after reading many books, academic papers, and blogs on everything from day trading to stocks for the long run.
 
From the great one.

350zCommTech said:
Couple lost more than a 1/3 of their nest egg. They invested in the L2040. Their strategy was buy/hold and DCA.
Click to expand...

Disciplined savers who still took a hit

This young couple thrived by investing in target-date funds in their retirement accounts. Then came the crash.


The Zee family Stacey, 35, And Nathan, 39 Arlington, Va.



Goals

  • Retire in about 20 years
  • Pay off their mortgage before retiring
  • Save money for college
Assets

  • $355,000 in retirement plans
  • $221,000 in home equity
  • $250,000 in other accounts
  • $50,000 in emergency savings
zee_family.03.jpg
Stacey, 35, And Nathan, 39 Arlington, Va.



(Money Magazine) -- Nathan and Stacey Zee have always been good with money. Diligent savers since their early twenties, the young Arlington, Va. couple used to hold monthly budget meetings - just the two of them - to review their spending and investments.
These days, Nathan, 39, e-mails Stacey, 35, a summary of their investments once a month, and the two, who both work for the government, discuss their goals annually, around the date of their wedding anniversary.
One reason they're so disciplined is that they've kept their investing plan remarkably simple. They invest exclusively through low-cost target-date funds because the Zees view these all-in-one portfolios as the easiest way to maintain their asset-allocation strategy. It's no wonder the couple had managed, at one point, to amass nearly $500,000 in their nest egg.
Unfortunately, discipline and simplicity couldn't protect them from last year's crash, which wiped out more than a third of their investments.
The pair haven't lost faith in the market, though Nathan admits, "If I needed this money anytime soon, I would be really stressed out." Yet with their first child on the way, college savings to consider now and hopes of retiring in around 20 years, the Zees want to know if they need to re-examine their goals and strategies.
http://money.cnn.com/2009/02/18/retirement/makeover_savers.moneymag/index.htm?postversion=2009021904
 
Birchtree said:
JTH,

We all know it takes courage to hold the asset base when a decline is happening. My oceanic account gave me a $1M haircut by last November - but I held my ground and actually dumped another $800K into the market on the bottom - making over 400 individual purchases. Right now this account is less than $100K away from making a $1M gain off the March 9th lows - in 44 weeks. That works for me. I've taken over $70K in profit and reinvested that also - now it's tax time. Since June 26th I've made 671 individual purchases counting today. The more in the bigger the win. I've always used dividend reinvestment as a DCA during the tough times. Last November 90% of all stocks were below $10 and 80% of those were below $3 - so much potential for the brave and hoofhearted. Now I'm a margin player and seriously plan to make another $1M or two before 2010 closes. I know it's a sad story but that's all I have to say about buy and hold. You have to be prepared to use dollar cost averaging when it stinks to high levels. Last summer I bought 45 toxic waste stocks in banks and finance - sure glad I did that, too.
Click to expand...


BT, you know I love you but here's the thing. I've lost track of how many times you've led the latest newbie down your rabbit hole of wealth destruction.

With over 10,000 post you are immediatley seen as a seasoned vet, but that doesn't mean you act like one. With great power comes great responcibility and it's irresponcible of you to go off spouting about your DCA principles when they only apply well "outside" of TSP where you can pick the ticker symbol & the price. Those rules don't apply well here and you know it.
 
I would tell the Zees to stay the course - they didn't panic and sell or transfer at the bottom - they will do just fine. Keep the DCA going.
 
JTH,

My dollar cost averaging into my TSP account helped return me to my previous highs several months ago. An $8 C fund price was perfect - I only wished I'd have been able to get more of it back then on the lows. The lowest C fund price was $7.86 on March 9th. When you DCA every two weeks at these lower prices it doesn't take long to add the shares - and that is how money is made. Lots and lots of shares accumulated at low prices and now they are really working as we are into the $13 range. There have been many members that have done exactly the same thing and they are all fine and dandy. The secret is the DCA going after the lower prices. I've been maxed on my contributions for a long time. There is an advantage to being over fifty.
 
You must log in or register to reply here.

Similar threads

Epic
The age 65 Medicare decision.
Replies
11
Views
335
FAAM
FAAM
tsptalk
  • Article Article
A morning sell off tests the lows, reverses, and closes positive
Replies
0
Views
181
tsptalk
tsptalk
tsptalk
  • Article Article
When traders become buy and holders
Replies
1
Views
339
JTH
JTH
tsptalk
  • Article Article
Follow through for stocks as oil plummets
Replies
1
Views
132
TommyIV
TommyIV
tsptalk
  • Article Article
Stocks continue to grind higher
Replies
0
Views
130
tsptalk
tsptalk
Back
Top