How do you reduce risk in your investment portfolio? Most people try to do so by diversifying their assets and avoiding stocks when fears are high. But new research indicates the best risk-reducing measure is to buy stocks — and hold them, Marketwatch’s Chuck Jaffe says.
If you’ve spent time lately trying to figure out when the four-plus-year bull market will come to an end, Mark Hulbert has a message for you: Stop kidding yourself. “The vast majority of professional advisers who try to get in and out of the stock market at the right time end up doing worse than those who simply buy and hold through bull and bear markets alike,” Hulbert writes in his MarketWatch column. “Even those few who beat a buy-and-hold strategy during one period rarely beat it in the next one. What makes you so confident you can do better?” […]
While many have claimed that “buy-and-hold investing is dead” in recent years, Validea CEO John Reese says in his latest Nasdaq.com column that the approach continues to work better than many market timing approaches — even during the alleged “New Normal”. Reese points to multiple studies showing how market-timers have struggled in both the shorter and longer term, as well as his own success with long-only fully invested approaches. “Take my three top-performing Guru Strategies (investment models based on the approaches of history’s greatest investors) over the long haul,” Reese writes. “While the S&P 500 is basically flat since that 2007 […]
In his latest column for the New York Times, Mark Hulbert examines an interesting study on buy-and-hold investing. The study — “When Everyone Runs for the Exit,” by Lasse H. Pedersen, professor of finance at New York University, concludes that it’s not traders or true long-term buy-and-hold investors who get hurt the most in a liquidity crisis like the one we’ve just experienced — it’s the investors who end up stuck in the middle. Pedersen told Hulbert about three different categories of investors, using a poker analogy. The first are the “strong hands”, Hulbert explains, writing, “Not only are they […]
The Financial Times recently interviewed several top strategists about the viability of “buy-and-hold” investing, and found that some are espousing more of a “buy-cheap-and-hold” approach. “In a challenge to the received wisdom of holding stock market investments for 20 years or more, to smooth out short-term volatility, some suggest that measures of cheapness can be used to make buying decisions and enhance performance,” writes the Times‘ David Stevenson. Here’s a sampling of what some of these strategists had to say: Robert Arnott, founder of Research Affiliates: “Basically, we have an industry which has developed a cult of equities — a […]