I'd have to see more data than your say so. Also, "Buy & Hold" can mean a couple of different things. If that refers to individual stocks, then that's not as good of an idea. If you buy individual stocks, you should be prepared to sell when things aren't looking good for the company OR sell if they have a spike. When buying managed funds, the risk of holding is lessened. Additionally, if you consistently put money into funds, I might call that, "Buy Buy Buy Buy Buy Buy...and Hold". It's not like I've been sitting on 2 million dollars of stock since 1989. Finally, if you put money in consistently (as I do) and then periodically put in EXTRA money when the market has taken a dip, then that's perhaps "Buy Buy Buy Buy Buy Buy Buy MORE...and Hold".In any event, it all comes down to personal comfort levels. I like to spend about 80% of what I make (this includes charitable giving) and then invest ~20%. If my wife were working full-time (she's just re-entered the work force part time after 14 years as a stay-at-home mom), we would do more than that. Early on, we invested 50% for 7 years. That was very helpful and allows me to continue to invest in a solid less risky way. Probably though, if I had to start all over again today at age 45, I would still invest as I do...personality comes into play with investing strategies...mine is SOLID and suits me well.
Blowing.Rock Master wrote:
Flagpole wrote:I don't like crazy risk...
Buy and Hold is much riskier than the trend following systems OTG and Myself use.
The standard deviation for Buy & Hold on an annual basis is 16.97% (1960-2010 data).
The standard deviation for the system I've been using is 12.49%.
The max drawdown for Buy & Hold is 55.55%. For my system it's 35.96%. In fact, Buy & Hold did as bad or worse than my system 4 times in 50 years.
How do define crazy risk if a 55.55% drop doesn't qualify?