I’ve posted Column Entry #51 at my weekly Investing: The New Rules column at the Death by 1,000 Papercuts site. It’s called Is Buy-and-Hold Evil?
Juicy Excerpt: The evil in Buy-and-Hold is that it makes those who follow it feel like fools.
There never was any support in the academic research for the Buy-and-Hold concept. There was a time when people thought that there was support. So for a time millions of smart and good people came to find great appeal in the concept. After the research came out showing that Buy-and-Hold is in fact the most dangerous investing strategy of all, they stuck to their belief because it would hurt their pride to acknowledge the mistake. That’s evil!
Buy-and-Hold by itself is no big deal. It was a good try. People who never make mistakes are people who never stick their necks out enough to learn anything. We learned a lot from our experience of trying out Buy-and-Hold and then discovering why it is such a loser idea. There’s going to come a day when people are going to look back at the Buy-and-Hold advocates as heroes for the advances we achieved because of their genuine insights (of which there have been many) and because of their mistakes (the discovery of which have led those of us who have left Buy-and-Hold behind to some very exciting places in recent years).
To say that Buy-and-Hold itself is evil is like saying that the idea that the sun revolves around the earth is evil. That idea was a mistake. It was something we had to go through to identify the next stepin learning how the world around us really works.