Are You Really a "Buy and Hold" Investor?

The DJIA (Dow Jones Industrial Average) record run of 9 consecutive days ended with Donald Trump's "fire and fury" comments to North Korea. The record for the Dow is 12 consecutive days of gains and that was set in January 1987, months before the Black Monday crash. Maybe it has something to do with the number 7...

Is the North Korea situation the event needed to cause enough fear to trigger a sell off in stocks? Maybe. Maybe not.

 

If you're a true "buy and hold" investor it really shouldn't matter. But do investors actually stick to a buy and hold investment plan? Will "buy and holders" actually have enough conviction to hold through a significant sell off? The answer is more than likely no.

 

Most investors don't adhere to "buy and hold" even know that's their plan and most sell at exactly the wrong time. This is a good blog post from Josh Brown (The Reformed Broker) explaining why. It's appropriately titled Nope.

 

Index investing with robo-advisors continues to be a hot trend and most of these investors are in the "buy and hold" camp. However, there are a lot of post 2008 investors and investment advisors who have never experienced a stock market crash or even a 15% correction. I talk about this situation in a past blog post - How Will The Robo-Advised React To Their First Gut Check?

 

You may have noticed that most of my posts have to do with trends or more specifically price trends. There are always plenty of reports and opinions for and against a trending asset class. As with equity markets, bulls and bears have been expressing their opinion for the last four years as many stocks continue to make new highs.

 

This is why price matters most when it comes to making money from trends. At the end of the day price is either moving higher, lower or sideways. You're either along for the ride or on the sidelines watching.

 

Despite many calling it a bubble, cryptocurrencies are trending in a big way. Bitcoin continues to defy gravity making a new all time high a few days ago.

 

If you knew about Bitcoin 7 years ago and thought about investing but didn't, you might want skip past the below graphic...

 


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