Gene Mauch was the manager of the Phillies baseball team when I was a boy growing up in Philadelphia. He once said something in an interview that has stuck with me ever since.
Mauch said that, when his team was on a winning streak, his job was to pop holes in the inflated egos of his players. When players are winning, they start thinking that they are so awesome that they can never be beat. They get sloppy. They stop doing sit-ups. They stop backing up throws. They’ve got it. They’re hot. Mauch would yell at the Phillies at such times. It was his job to bring them back to earth. Read More…
Buy and Hold in the long term is the best strategy for Index funds that follow the market. Indexes will always go up and down in the short term but over a long period they always go up. So doing something like Mauch is not wise.
So it depends on what you are buying into your portfolio.
Best article i’ve read all day!
Hmm now its got me concerned about my holdings. lol. I have been sitting on my stocks for 5 years and havent once checked to see how they are doing. I might have to take a more hands on approach.
Let’s not forget that although buy+hold is still a good strategy it also helps to do a dollar cost-averaging approach where you put money into it bit by bit consistently so as to average out the risk since over time the stock will go up and down. Adding something like this: value-informed indexing is also interesting, assuming you jump into a fund that is made up of a more volatile mixture.
It’s a very interesting read because we are always told to buy/hold even when markets are going well which is suspect because you might be buying at the wrong times.
Fascinating approach. They don’t teach such a method in school but it does seem logical when you think about it.
Never heard of valuation-informed indexing before. Seems interesting. Granted i am more of an active trader and don’t subscribe to any methods similar to buy-and-hold but it is an interesting mix that might be useful.
Sadly i wish i had read this before losing about $10K trying to time the market when i saw my friends buying some bank stocks a year ago. Banks though are starting to rise again since the regulation on them is weak but i had already sold out and took a big loss.
@connie, didn’t you hear that putting your money into actively traded mutual funds is never wise? A study showed that almost all managed funds never outperformed indexes over the long term. So i say save your money and put it into a more stable index instead.
lol i cant believe someone remembers Gene Mauch. Brilliant on the Phillies!
So in short it is a smart-man’s buy and hold strategy.
Why is there no pefect bullet for this stuff. This is why i look to active maanaged funds to take away the work for me.