Buy, Hold, and Sell!

Chapter 9The Multimillion-Dollar Argument for a Buy-Hold-SELL Strategy

As a teenager, I spent a lot of my free time in financial planning seminars. Really.

My mother was an accomplished investor who was always looking for learning opportunities. When she found an interesting seminar, she dragged me along. I have to admit I didn't particularly enjoy the presentations, but through osmosis I picked up some good information. I also learned about the preeminent investment philosophy, the strategy that every smart investor should follow, which was of course, buy-hold.

Later, when I decided to make financial planning my career, I heard the same advice over and over. All the financial planning classes I took taught us to hold on to stocks. All the literature I read said that investors should follow the buy-hold path when building a retirement portfolio. My teachers, the media, the experts—they all chanted the same buy-hold mantra:

• Be a long-term investor.
• Diversify.
• Buy high-quality companies.
• Rebalance periodically.
• Do all that, and your job is done.

Don't get me wrong; some of that is good advice. You should have a diversified portfolio, purchase stock in high-quality companies, and rebalance your portfolio. But is that enough? Can you just make good decisions, hold on to your stocks and wait for everything to turn out fine? Even though I had been initiated into the buy-hold brotherhood at an early age, I had some misgivings from the very beginning.

My Personal Experience with ...