Is Buy-and-Hold dead? I won't deny, it was, for a while. The second half of 2007, all of 2008 and the first couple months of 2009 was a trading environment. Buy-and-holders were taken out back, hog-tied and shot in the face and groin, repeatedly. They were whipped, beaten and scolded over and over again, all at the hands of traders.
After all the abuse, the buy-and-holders have developed a case of
Stockholm Syndrome. They now believe that the only way you can make money is by day trading. And the only way forward is to preserve cash or buy bonds or treasuries. They have forgotten how ridiculously easy it is to make money in a bull market without having to do a damn thing. The idea of holding stock for five or ten years (which seemed smart two years ago) now seems as reckless as flipping houses. Their expectations for growth is in the low single digits --
or they don't expect to make money, at all.
If you listen to all the smart
professors, economists and analysts they will tell you that buy-and-hold is dead. They say it's different this time. They will bombard you with "facts" and shit. Buying a stock and riding it up 80% in a month is too risky and not for regular mortals.
Nonsense! What we are experiencing in the stock markets is called the
Wall of Worry. And as long as sentiment remains negative, we keep going higher. That's right, negative. Because it's the pessimism that keeps the market moving up. Very few people got in at the bottom, so everybody wants a pull-back before committing new capital --
but they all want in. The problem is, each day the market keeps getting away on them. So they buy high, sell out and then buy even higher. Traders are getting fucked. Short sellers are getting murdered. Hence my theory that trading is dead, and buy-and-hold is running the show. And I expect it to work for quite a while.
We are only at DOW 8300 or so. What the fuck is that? Nothing! Get some perspective on that number. It's like 1997-1998 levels. It's over a decade ago. I think we continue to move a lot higher. And all the smarty-pants can keep saying how we need a pullback, how overbought we are, shitty employment numbers, low GDP, blah, blah, blah.
If you ignore the tape action and try to focus on fundamentals, you will find yourself buying stock WAY higher than here. Buy-and-hold began to work at the end of February, 2009. Deal with it.
Folks, this is Johnny Newsmaker signing off. We now return you to your regularly scheduled programming… "
The Great Wall of Worry" only on Ranting-TV…
Once again, the bulls have resumed their stomping ways. On the same day that the largest bankruptcy in the world has taken place, the market is up and away. While this has left many professors and negative-nellies scratching their heads, others have realized that the game is stacked. You can't lose, when the government climbs into the bullpen.
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