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Brandes Institute: Does “Buy and Hold” Still Work?

December 02, 2009

Research article from Brandes Institute: In the wake of market turmoil over the last two years, many investors may feel the need to change their approach and be more “nimble” or “opportunistic” in their pursuit of investment goals. For some investors, being nimble means abandoning fundamental tenets of traditional investment practices such as asset allocation, periodic rebalancing, and buying and holding individual securities. Some pundits claim that today’s “dynamic” market demands a dynamic approach. They advocate individuals adopt alternative methods that include market timing, short-term trading, absolute return strategies, and expanded use of derivatives.

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Rating: 3.4/5 (7 votes)


Kfh227 - 7 years ago    Report SPAM
"In the wake of market turmoil over the last two years ....."

Here is my lesson. It can be summarized as follows.

If there are no cheap investments, don't invest.

I had a hell of a time finding good investments 3 years ago. It seemed like everything was overvalued. I thought it impossible to find things trading at a 25% discount not to mention a 50% discount. Knowing what i know now, I should have been atleast 50% in cash and cash equivalents if not 100%.

After years of just not finding any bargains, I just saved money and bought what looked cheapest figuring that in 10 years it will have been the right decision. While this is still probably true, the lesson is that you should always buy at a deep discount and if you can't, sit on your ass. Opportunities will come. They always do. Whether it is mad cow disease scaring people or the credit crunch" one thing is gaurenteed. This current turmoil will one day end and things will improve and once things improve, something will cause turmoil once more.

This is the lesson to be learned.

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