Buy, Hold, and Sell!

Chapter 1Buy and Hold: A Bad Strategy for Anyone over 50?

If you're over 50 and still investing the way you did when you were 35, you're in danger. You may be inadvertently putting yourself at risk of losing your hard-earned money, your desired lifestyle, and even your ability to retire.

You can't take the risks you did when you were younger. You're not in the game for growth anymore; you're in it to protect your principal. You need to protect it from taxes, from inflation, and from bear markets. When you get within five years of retirement, you need to shift your focus to protecting what you have built. It's easier said than done. All of a sudden you have to adopt a mindset that's 180 degrees from your former strategy. The buy-hold philosophy may have even helped you earn your wealth. It doesn't matter now. That strategy is no longer your friend, even if you're the best investor in the world.

Even the Best Investor…

Let's say you are the best investor in the history of the world. Over the past 30 years, you've made 20 percent every single year. You're a legend. They erected a 20-foot bronze statue of you on Wall Street. Every day, all the brokers and investors who pass by rub your foot for luck. You've amassed a huge estate—a phenomenal amount of money—and plan to retire in six months. Everything is great, except that it's now January 2008, and you believe in the buy-hold myth. What happens next? You lose half your money in that one year. Even if you end up with a lot of money ...