I posted as Guest Blog Entry at the Married (with Debt) blog yesterday. It’s called The Buy-and-Hold Myth.
Juicy Excerpt: In the used-car market, the price of the car being sold is the result of a battle waged between the car seller and the car buyer. The seller wants a high price. The buyer wants a low one. Each side has to give something or risk seeing the negotiation fall through. The end result of the battle is usually a price that is more or less right. The car-selling market works.
It doesn’t work that way in the stock-selling market.
Have you ever heard anyone cheer low stock prices? The magazines love bull markets. So do the experts. So do the bloggers. So do your friends and neighbors and co-workers. So do you.
So the stock market is not really a market. Or, if it is, it is a very unbalanced market. A market in which everyone is pushing for higher prices. A dysfunctional market.
Juicy Comment #1: Buy and hold is not true for all the scenarios but Buy Intelligently and Hold should hold for most of the scenarios.
Juicy Comment #2: I’ll keep my thoughts to myself because we can just agree to disagree.
Juicy Comment #3: I tend to agree that ‘buy & hold’ is largely an invention of the Wall Street marketing machine rather than a true, science-based strategy. However, telling people to abandon buy & hold without also providing a CONSISTENTLY RELIABLE mechanism for judging when prices are ‘high’ or ‘low’ is rather unhelpful, don’t you think?
Juicy Comment #4: I enjoyed reading your article, and I always think it’s good to read opposing viewpoints on a topic, it gives the reader additional information and provides a new perspective on the issue.
Juicy Comment #5: I think there is a middle ground here, isn’t there?
Juicy Comment #6: This implies that I can’t just invest my money and walk away for 30 years when I retire, this implies that I have to take charge and watch the market and act accordingly. Ugh.