Investment Philosophy

Has your "Buy and Hold" strategy turned into "Wait and Hope"? Is "Buy and Hold" the only way to invest?

There is a commonly held perception that the ONLY way to invest is to ‘Buy’ quality stocks or mutual funds and ‘Hold’ them for the long-term.

In a recent twist on this line of thinking, investors have been told to allocate their investments among multiple assets types (i.e. US Stocks, Foreign Stocks, Emerging markets, etc.) and hold them to retirement. This type of cosmetic investment management goes by many aliases - lifecycle fund, pie chart, asset allocation, however they are all the same – Buy and Hold.

What is the real cost of “Buy and Hold”?

The most obvious problem with buy and hold, in our opinion, is that it is not a strategy. It is, in fact, the absence of any logical plan to attempt to protect profits and limit losses. A buy and hold approach sacrifices any semblance of control and relies on luck and hope rather than planning and control.

Buy and Hold may work well for someone in their 20’s or 30’s, but it has the potential to severely impact those in or near retirement. Many individual investors do not have a 20 plus year time frame to recover from large losses.

Is there another way?

For some advisors, buy and hold will always be the best course of action. However, that is not how we manage money. We believe there is a BETTER way. In sporting events and military operations, overall victory only comes from executing a good offense AND an effective defense. The same is true of investing.

The different strategy we use for our clients

We feel that proper investment management involves active investment strategies rather than passive and static investment models. We help our clients with a simple logical plan to attempt to protect profits and limit losses.

Recovering from a loss requires much greater gains:

Any opinions are those of the FA and are not necessarily those of Raymond James.