Quick answer: YES! Many people have subscribed to the buy and hold theory but a look at the current market conditions, down over 50% since the peak. This reveals those who held through this period lost much of what they have accumulated. If you’re a buy and hold investor, now is a great time to rethink your strategy…your retirement and financial freedom might depend on it.
With the ongoing decline in the stock market, buy and hold investing has wiped out massive amounts of wealth, a lot of which has came from retirement accounts like 401k’s that have a sorry list of mutual funds that an index fund usually outperforms. With the loss of wealth, many are choosing to manage their own money and rightfully so.
I Bought And Held
I was one that used the “buy and hold” approach to investing but no longer practice this method. I do buy and hold bonds and other income generating securities but if they rally, I am selling and I will pick it back up when it drops again and it will.
Swing Trading Is An Option
If you were a believer of the buy and hold strategy, I would recommend that you start looking to swing trade or position trade. Most of my trades are swing trades and few are day trades. As a swing trader, I follow the trend until it’s over or I am up big whichever comes first; then I’m out. No questions. Pick up a few books on technical analysis and charting, read and reread them, paper trade, and then start trading small amounts. If trading is not for you, get in an index fund that tracks the S&P, but as a trader, you can make as much in a down market as you can an up market.
Don’t Be Afraid Of Taxes
Many people think the more they trade the more they will pay in taxes. You only pay more taxes when you are profitable. Take gains when you have them and worry about taxes later. Every time you think about paying more taxes, tell yourself, I’m making more so I have to pay more. Think of it as a job, the higher you move up the corporate later, the more money you make but at the same time you pay more taxes.
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