Buy and Hold Investment Strategy

"Buy and hold" is one of the most heralded investment strategies promoted today. "Buy and hold" is also one of the few investment methods where you are guaranteed to lose money 2 out of every 5 years...so why do it?

Before expanding on the questionable value of "buy and hold", it's probably best to take a deeper look into who's spending their millions of dollars of marketing money convincing you that "buy and hold" is the best idea and why.

"Buy and Hold" Promoters

"Buy and hold" promoters vary but I'm going to single out the mutual fund( http://www.stockrhythms.com/investing-in-mutual-funds.htm ) companies at this point since they seem to have the deepest advertising pockets and are highly visible in their promotion of "buy and hold".

Mutual funds have a strong vested interest in having you buy into the "buy and hold" mentality since their entire business model depends upon the average investor keeping their money parked...through good times and bad.

Remember, the mutual fund companies are earning a profit from your investment even while you are accepting losses!

So "buy and hold" is really the greatest investment strategy available, it's just a matter of perspective. If you like that your mutual fund company profits while the Bear Market ravages your account value, then "buy and hold" is for you!

So let's look at some data to see how this really works.

"Buy and Hold" Facts

Between 1929 and 2002, there have been 14 Bear Markets with an average of 39% slashed off the value of stocks. During this 74 year period, it took an average of 3.5 years to return to breakeven!

Every time a "buy and hold" investor loses money in a down market, they lose invaluable time to reaching their financial goal. After eliminating overlapping Bear Markets, 41 years were spent suffering through a Bear Market or returning to break even.

In other words, "buy and hold" investors spend 2/3 of their time just to break even!

"Buy and Hold" Myths

My favorite myth or scare tactic used by investment gurus is; "buy and hold" investing is critical since you cannot afford to miss the bull run when it hits. And they go on to cite what happens to those that miss the "big days".

Ah...good point, what does happen? If you would have invested $100 in 1926 and just left it there until 1993, your investment would have climbed to $80,000. Conversely, if you had tried to time the market and missed the 30 best months, your investment would have only been worth $1,200.

"Buy and Hold" Does Work Better?

So I've just convinced you that "buy and hold" does work better right? But what would have happened if you used market timing and missed the 30 best months and missed the 30 worst months? Your investment would now be worth $120,000 or 50% more than simple "buy and hold".

Not to get too carried away but if you had avoided the 30 worst months and still managed to hit the 30 best months, your investment would have increased to an astronomical $8,600,000. Now I'm not going to try to convince you that market timing is going to hit every winner and miss every loser but I also don't think it's fair for the "buy and hold" advocates to represent only one side of the equation to their benefit either.

"Buy and hold" is a guaranteed method of losing money during every Bear Market. Give yourself a fighting chance by looking at a better way to invest.

"Buy and Hold" Replacement

So how do you avoid losing money every Bear Market with "buy and hold"? The simple answer is "get out of the stock market when it's the Bears turn". Of course, that's usually harder to do than to say.

This is where we can help you to become a better stock market investor. Not only are we going to show you how to avoid the Bear Market losses, we're going to show you how to profit from the Bull Market and then turn around and profit from the Bear Market.

And I'm not talking about extreme market timing, I'm talking about a conservative, time tested investment process.

A Better Investment Plan

There is a better way to position yourself for a higher probability of investment profits than extreme market timing( http://www.stockrhythms.com/market-timing.htm )or passive "buy and hold". One that has been tested and proven with over 74 Years of Stock Market Research! Our proprietary Olympic Ring( http://www.stockrhythms.com/how_it_works.htm ) investment system has been issuing profitable trading signals, trade after trade, year after year, and we can start doing it for you too!

Maximize your returns while lowering your overall risk through the use of a highly scientific and emotion free system. And unlike the "buy and hold" investment plan, you'll be positioned to profit from the Bear Market and the Bull Market. Now won't that be a change!

Let us show you a better way to invest!

Call us(toll free: 877-554-4800) today to learn how we can help you earn a profit in both directions. Or download a FREE COPY of our stock market investment book( http://www.stockrhythms.com/mutual-fund-book.htm ) so you can learn from the past to earn in the future - Invest With History

----------------------------------------------
This article was originally published at: http://www.stockrhythms.com/buy-and-hold.htm

Copyright: www.StockRhythms.com

You can reproduce this article as long as you leave this copy right statement unchanged.
----------------------------------------------

Gary J
Sr. Managing Director
VerticalMarketing,LLC
sudha@stockrhythms.com
http://www.stockrhythms.com

---

Municipal Bonds

Because there are so many stocks that are NOT paying... Read More

When?

When will the stock market stop going down and start... Read More

Low Tide

When you stand on the ocean shore and watch the... Read More

Humpty Dumpty the Stock Market Falls Down

Humpty Dumpty had a great fall and all the King's... Read More

What is a Trading Plan ? and Why You Need One?

How do you make money without picking tops and bottoms?I... Read More

Investing in Trash Company Stocks

Refuse is a serious issue in any society, about as... Read More

Eternal Sunshine

There is a current movie entitled "Eternal Sunshine of the... Read More

Adding Funds

Someday you may want to retire and continue to live... Read More

Emotional Involvement

I'll bet with almost anyone that has stocks or mutual... Read More

Stock Market Education; Day Trading for Beginnners; How to Pick Stocks

The trading method you employ to approach the stock market... Read More

Managing Investing and Stock Market Risks

Reduce your investing and stock market risks by:Setting your sights... Read More

Selling

The stock market has been going up for more than... Read More

Dont Ask Your Broker

Unfortunately, most of you who are reading my column are... Read More

My Stock - Right or Wrong

We all know the expression, "My country, right or wrong",... Read More

Stops Make Money

During the day I watch CNBC-TV, the stock market channel.... Read More

Dont Lose All Your Money

That sounds like good advice doesn't it? Don't lose all... Read More

Stock Trading Diversification

This is the continuing story of our two imaginary traders,... Read More

Analyzing Growth Stocks: An Important Focus For Any Investor

Analyzing growth stocks is an important focus for any investor.... Read More

Trading Baskets II: The Crapolio, A Roll of the Dice in the Stock Market

In a previously written article, we expanded the use of... Read More

Hedge Funds

You read and hear a lot about hedge funds. Unfortunately,... Read More

Protect Your 401K

Checked your 401K lately? Going back to about a year... Read More

Lifestyle Funds Provide Greater Security?

With the stock market stubbornly refusing to settle down and... Read More

How (NOT) to Buy Mutual Funds

When it comes to mutual funds, there is a lot... Read More

Trading Tips No 6: The High Cost of Low Cost Stock Market Information

It has been said that low cost or even free... Read More

A Personal Stock Market Investment Philosophy

∙ Make every investment in the stock market a long-term... Read More

Analysts - Do They Really Know The Stock Market?

When you become interested in a stock or mutual fund... Read More

Ignore Stock Market Talking Heads

You should ignore analysts on TV, the radio, the newspaper... Read More

Chart Reading

As an investor you will want to check out any... Read More

Fools Gold

The stock market has been in an up trend for... Read More

Why This Bear?

People are constantly asking me why is the stock market... Read More

The Information Age

It is wonderful to be alive in the information age.... Read More

Intervention

Intervention. Now don't let that big word scare you. The... Read More

The Great Stock Market Secret

When the stock market is going up and all your... Read More