Here’s a great article that makes a few more points about why buy and hold is still alive and well:
http://saveinvestlive.blogspot.com/2010/05/buy-and-hold-is-immortal.html

The very reason investing in equities works is *because* these periods of under-performance stop people putting all their money in the markets, and thus bidding up assets to destroy the superior returns we expect from stocks.

That said, I think buying and holding an index makes more sense then buying and holding individual stocks for 50 years. The world moves too fast these days for that strategy.

Honestly, for me, selling is one of the hardest things to do because it’s all psychological. Buying simply involves doing my homework and then setting a low entry point for a company that I like and is cheap. Selling on the other hand goes against our human nature. When things go good, we start to believe it will keep getting better, eventually to find most of our gains has been erased.

So something that should be done before making a purchase is to determine your exit price range and be emotionless about it. One way is to pre enter a sell order at your sell price or put in a trailing stop (although I’ve never done this). Or write down the sell price next to your buy price in your portfolio tracking spreadsheet or software so that you don’t forget and get caught up in the rush upwards.

I may have to write a post on this in order to remind myself as well. I’m keen for feedback and advice myself

– Jae, exactly, totally agree. But could you please tell more about, in general principle, when it is the time “have to sell”. I think knowing when to sell is as important as knowing when to buy. Thank you.

Although I call myself a buy and hold investor, my definition is that I just don’t day trade. I’ve never considered buying and holding till I die a realistic thing to do since I will require the money to either make big purchases, start a business or give it away. So while I don’t consider it dead, it has never been something I have focused on. I agree with Sivaram that it leans more towards the stock picking. I wouldn’t mind holding AEO or KTII if it went up forever, but it won’t, so I’ll sell when I have to. So you and Jim are really saying the same thing. Just from a different angle but overall its the same and I think the same too.

Even buy and hold managers sell. Buffett’s buy and hold is literally buying and then dying which is what the media tends to focus on since if Buffett says it, to them it must be true.

In my view, buy & hold is dead! It has basically been dead since 2000. Buy & hold, if we assume it refers to buying a basket of stocks and holding them, did really well in the 80’s and 90’s. The main reason was that there was a huge stock market boom–the 2nd best stock market boom after the 1920’s. The decline in interest rates was icing on the cake for equity investors.

After the dot-com bust, which ushered in the bear market, buy & hold has been dead in my opinion. The crash from the credit bust probably seals the fate of buy & hold. My feeling is that buy&hold will do poorly in bear markets and if the current bear market persists, it will be a rough period for buy & hold (although some say a new bull market may have started.)

Sivaram Velauthapillai’s last blog post..Opinion: Auto industry set for a huge shake-up

@ Anon,
Jim and I are two different people. I wouldn’t bother going under different personas on my own blog lol.

@ Jim,
Thanks for clarifying.

no, I’m Jim. There are far more regular commentators than myself. I’ve been following Jae’s blog for sometime now and have always enjoyed his advice as well as finding a common ground with it. We seem to rationalize alike and maybe that is how you have found our similarities.