Buy and Hold Is Dead: How to Make Money and Control Risk in Any Market

Chapter 19. A Greater Depression

When I began to discuss my opinion that buy and hold will be dead for a handful of years, and when I supported that with references to the Investment Rate, I was reserved. As of 2009, the third major down period in U.S. history had just begun, and the severity of the weakness that lies ahead will surprise many.

This chapter will be short, but not sweet. I am going to offer a forecast for the next handful of years, and that forecast will concern many people. Until now, my advice provided investors with tools used to embrace opportunities when they surfaced. Clearly, risk controls and wealth preservation play important roles. However, with this continued observation, I expect wealth preservation to take on a new meaning.

Clearly, this book is riddled with references to the Investment Rate. The reason is important. The Investment Rate is the most accurate leading longer-term stock market and economic indicator ever developed. It has been a leading indicator to all of the major economic cycles in U.S. history. That includes both the up cycles and the down cycles, respectively. Currently, the Investment Rate suggests that the market is in a down cycle, and risks are high as a result.

Even though I always look on the bright side, I cannot ignore risk. However, even in the face of risk, the cup can still be half full. Opportunities will always present themselves if we are in a position to take advantage of them. This will be true in both up and down markets. ...