Buy, Hold, and Sell!

Chapter 16Bits and Pieces: More Buy-Hold Nonsense

I recently read an article where several buy-holders maintained that investors who got out of the market were fools. Let's take a look at their arguments:

Many investors sell because they're afraid, and end up getting out of the market at the bottom.

Sounds like that buy-holder believes that investors panic. Okay, I'll buy that.

They forget that history shows that the market always comes back.

Hmmm, that expert needs to read Chapter 10.

They need to stay in the market for the long term, for more than 10 years.

More than 10 years? This guy can't be talking to my clients. Retired people need to access their money now. Rarely can they wait 10 years to draw money from their investments.

For example, if they held for 20 years…

Whoa. Twenty years? This interviewee is not only dismissing over-50 investors, he's talking nonsense.

“Ten Years” Twaddle

As I've said earlier, investors over 50 years old can't afford to wait even 10 years, much less 20. They invested so that they could retire and have a nice life, not so they could sit and wait around for years before spending any of their money. You could argue that the buy-holders interviewed in the article were speaking to a younger audience, but I don't believe their advice holds water at any age. Do I want my 24-year-old daughter to buy-hold for 20 years? No way. I don't want her to lose half her money in a bad market, even if she may get it back in 20 years.

The idea of a 20-year holding ...