Investment Series: Buy and Hold is Not Dead

[TearsOfPuppys]

Nice to know you're a Guinness drinker Dan! I guess great minds drink alike.

[norris4245]

How have you been doing lately? The friggin Dow has crossed 10,000 88 times since 2000. What a freak show. I love it when guys like Vangaurd tell middle America to just hang in there. Then tells them to recalculate their retirement years cause they were essentially WRONG AGAIN.

[AirelonTrading]

@norris4245 Dividend Investing accounts? Year to date? On smaller accounts - they are about flat to up about 1% - which means I'm only beating the market by about 9%. Not great.

Trading accounts though? I'm kicking butt there this year. I'm up about 44% thusfar.

[norris4245]

Are you a trader or a fund manager or an RIA or what exactly are you?

I can't figure it out. I read the book Buy and Hold is Dead (again) by Ken Solow recently. You should too. And then we will get back together.

He also has some good Youtube slots. Check it out.

Keep it up!

[AirelonTrading]

@norris4245 Ah ... I see the confusion.

I'm a professional trader who runs my own money. Similar to Matt Davio or G Simmons (Scopelabs)

[norris4245]

You say buy and hold is not dead. Are you saying that because people do it or are you saying that because it is a salient strategy? I'm not sure what you are trying to get accross here at all. What do you mean by "credit markets"? Bond markets? What?

[AirelonTrading]

@norris4245 It's the concept of buying and holding dividend bearing stocks. I wouldn't buy a mutual fund if my life depended on it (Generally, my management and skills is FAR beyond that of most fund managers, besides I revolt at the idea of having to pay a fee for anything, beyond comissions). But "buy and hold" has reference to buying stocks, and holding them for extended period.

And yeah, the "credit markets" are also known as the bond markets

[norris4245]

So when Fidelity dumps everything, and you are holding on to an entire portfolio of Fidelity Mutuals waiting for that miraculous comeback, (assuming you have time to wait with), what are you going to come back into the market with? Your silver? You are not going to buy and hold your silver anymore? Wait - how do you keep your powder dry if Fidelity is dumping everything and you have such complete confidence in the market. Isn't that close to a prediction? Are you now predicting?

[AirelonTrading]

@norris4245 Why in the name of God would I be holding a mutual fund?

[AirelonTrading]

@norris4245 And the second part would be - At times, you have to make decisions based on certain assumptions - aka - the stock market will remain here ( I could make money regardless - along the theme of my entries "Trading for a Living" and "Trading for a Living without being a Trader" )

If the stock market is no longer there? I have a lot bigger problems on my hands than worrying about my portfolio strategy breaking down for the first time in years

[Dicofole]

Who is Matt you are talking about at 5:20 in your video? where can I find his videos?

Great vids like always.

Thanks!

[AirelonTrading]

Crashof2008 is his YouTube channel name.

Highly recommend them for looking at the problem of over-leverage.

[69elpresidente]

you should put that on a chain lol

[harshterrain]

Please becareful with buying and holding stocks. Capital preservation is key as well not just dividends. For example if you bought GE at $35 and now its at $12.10 you've lost way too much capital. It would have been better to stop out of GE at $30 and buy back at $6.

I'm short this market via ETFs.

SDS

SRS

SKF

TWM

[AirelonTrading]

Which is why I'm hedging with the FAZ at the moment (as I mentioned on the daily blog) to hedge the DRIP stocks that are held. The hedge, could end up working out more profitable in some of the accounts.

Aren't ya a little heavy on the short side from a diversification money management standpoint?

[harshterrain]

I don't invest, hedge, or diversify. I only trade (day or swing). I'm out already out of the above inverse etfs with a nice profit on each. Thanks for the videos, you keep me thinking.

[dregret]

Hey Dan. What do you think about GM as a buy and hold?

[AirelonTrading]

Wouldn't touch it with a forty foot pole.

[Excidium567]

would you glance at at from a distance?

[AirelonTrading]

Nope. Once the government moves in with a Neo-Mercantilistic move? History has proven that the corporation is always on borrowed time.

Happened to the whalers. Happened to the railroads from earlier in the 20th century when the government moved in. Didnt work out too well either for the airlines.

The government moving in, and setting up shot = zero earnings profitability in the future.

[Bigbobdallas1952]

I tried to reverse the two comment since I was over on them so read the second Bob below and then it will make since. Sorry for the long comment

[Bigbobdallas1952]

I am working on getting my 25,000 built up by the time I retire from my current job in 5 years so I can day trade in retirement. Which broker or brokers do you use if I may ask? Also I am still learning about a lot of stuff on this trading. I am now getting my self ready to start studying and using options and write options and such. By the way is there a specific book that you might rec. for how to do options and such. I know that the net has tons of places to look, just curious.

[AirelonTrading]

Heyya Bob. No worries, as Derek (ohio1998) will tell you, I OFTEN go over the 500 chars :)

I use Sharebuilder for my Investment portfolios, as well as optionsXpress. I use another optionsXpress account to trade with. So I have no problem having them at the same broker, but for my own psychology? I have them in seperate accounts.

[AirelonTrading]

As far as options? I noticed on the blog that I mentioned in this video? It had a recommended book on options. I can't personally recommend it, as I haven't read it yet, but that was the last book I had at least seen on options.

Myself? I just sort of 'picked it up' through trial and error (not a method I'd recommend, lol) over the years. I also have a playlist on Futures Commodity options, but the principles of black scholes apply to all options. It can be found at:

[AirelonTrading]

the playlist at view_play_list?p=BF53B86BD4501­DA7

[Bigbobdallas1952]

I noticed you said you keep your Investments in another account. Do you use the same broker or what I was wanting to do that but wasn't sure if I need to get another broker or what. I use by the way for my swing trading Trade King, although I have only been into it for a short time. I just now got out of cash account and now in margin. By way I am 57 so I waited a long time to do this. But i think i pick a good time to get in an learn. I realized I was over on characters so it is below

[ohio1998]

Buy gold, we are all gonna die!!!!!

[AirelonTrading]

But those opportunities are brief, and you have to know when to step in.  Buy when everything is on fire.

[ohio1998]

I'm with you, just making you explain yourself. :)

[AirelonTrading]

Heheh.

:^P

[AirelonTrading]

If I can make 170% on my money and assets in 7 years when I'm sitting 95% cash right now ready to go? I'd be MORE than happy with that in 7 years.

Investing is about wealth creation. NOT price difference as trading.

And in the 1940's, the market gave a gift by pulling back again, and giving another opportunity to buy at low prices, so by 1950, you're not looking at getting back to 100% With reinvestment of partial capital? You're looking at 400% - easy

[ohio1998]

How do we know that last October wasn't that event?

[AirelonTrading]

... spend money. At the same time, it'd further decimate the housing market buyers (which is supposed to be leading the rebound), and at the same time, any new mortgages resetting are going to be resetting in an environment of raising rates. Not good.

At the same time, unemployment is in the teens in many areas, and jobless pool is even higher. So there is no income, and rates continue to increase.

A treasury auction fail at this point? And we have a repeat, in a worse situation,

[AirelonTrading]

... October, only in a much, much worse economic scenario.

I truly am beginning to believe that we are going the way of 1933, and the truly sad thing is? It didn't have to happen. All of the wrong moves, were made at exactly the wrong time.

[AirelonTrading]

Ugh, it looks like one of my comments, my first comment, didn't go through.

It was along the lines of: The economic situation as it stands now, is almost way, way worse than it was last October. The governemtn is getting to a point of being broke. The rates are such now that housing can't recover as rates go higher, and the govt can't spend any more, due to the rates.

[AirelonTrading]

Another dislocation in bonds and equities is setting up. And the credit markets, always, always, always win.

[AirelonTrading]

But why would you wait until it gets back to the highs?

You bought in 1933, and by 1940, (7 years) you would have made 100% on just the capital. if you bought business assets to begin a business (wealth creation), or through the dividends that were left? You'd be looking at far, far past 100% on their money.

People have to learn to buy when no one else wants anywhere it. When people are puking up their assets, whether it be real estate, equities, or whatever.