Buy and Hold

[Mick100]

There's been quite a bit of debate, on several threads, on the subject of the "buy and hold" stategy - is it dead? From my observations it would appear that about 95% of S/T's believe that buy and hold is a losing strategy. I held about 60% of my share portfolio through the slump. Some of the shares are back in the positive territory while others have turned up but are still deeply in the red.

I am interested to know what other peoples compound annual return is for, at least, the last 5 yrs - I want to know what sought of long term returns traders are getting - of course, this includes the last 2 yrs

My net worth has grown at an annual compound rate of 37% since the beginning of 2003. If I add in living expenses and tax expense then my return would be around 40% pa from share investing and commodity trading (this is my only source of income)

[Grand Uber]

37% is mighty impressive

Is that by using eclectic contrarian strategy by chance?

Im finding the book you recommended very revealing, and it seems the statistics speak for themselves, it would have me believe that buy and hold is anything but a dead horse.

[shasta]

There's been quite a bit of debate, on several threads, on the subject of the "buy and hold" stategy - is it dead? From my observations it would appear that about 95% of S/T's believe that buy and hold is a losing strategy. I held about 60% of my share portfolio through the slump. Some of the shares are back in the positive territory while others have turned up but are still deeply in the red.

I am interested to know what other peoples compound annual return is for, at least, the last 5 yrs - I want to know what sought of long term returns traders are getting - of course, this includes the last 2 yrs

My net worth has grown at an annual compound rate of 37% since the beginning of 2003. If I add in living expenses and tax expense then my return would be around 40% pa from share investing and commodity trading (this is my only source of income)

Im someone who takes the medium/longer term view, but sometimes trades along the way...

In 2008 my trading results were way above my "buy & hold" strategy, but 2008 wasn't a great year for the markets in general.

What people forget is that trading profits incur tax, & that tax eats away at your returns (as does brokerage), unless you are playing with large amounts, & that brings about more risk.

I stopped trading for a bit & found my actual net worth went up much quicker than i thought, with the stocks i held longer.

I've started trading again in this tax year, but am trying to limit the number of trades, as i dont see myself as a trader, but merely an opportunist in a volatile market.

[Mick100]

37% is mighty impressive

Is that by using eclectic contrarian strategy by chance?

Im finding the book you recommended very revealing, and it seems the statistics speak for themselves, it would have me believe that buy and hold is anything but a dead horse.

Yes - I do usually buy "out of favour" shares
Loaded up on gold/silver shares late last yr when they were selling for pennies

[ratkin]

Many people here dont seem to understand buy and hold , this is rather suprising for a stock forum , even one more concerned with trading.

Firstly they fail to appreciate the long term nature of it. They think two years rather than ten or more. They also tend to assume that the holdings are bought at the same time.

The biggest mistake they make is failing to appreciate the role which dividend growth plays in a long term portfolio .

One example i will give from my own portfolio is metcash.

Now , many consider metcash a very boring stock which day to day hardly moves, it tends not to attract posts on forums and is of little interet to traders.
But i will now show how this boring untalked about stock has proved a very good one for the rat

my initial investment was to buy 5000 shares at 1.00 a share in 2001 (was actually 1.02 but round numbers make things easier)

That initial holding of 5000 dollars worth now sits at 20000 with a 4.00 price (again round number , current price about 4.40)

Not spectacular , but then again not too shabby. However where the real money is made is in dividend growth. Metcash hasnt been a great performer , but has been steady , slowly increasing dividends , even during the current economic blip. I have topped up sevel times reinvesting dividends

Im now making around half my initial investment each year on dividends alone. In another few years the initial 5000 investment will be paying for itself every single year.

There is nothing special about metcash , there are many , many stocks that perform similarly or in many cases better.

Tesco is another of mine , which over the years has far outperformed metcash. (Was actually my fathers, which i inherited) Ryman healthcare another .

Once the compound effects of time and dividend growth start to work their magic its amazing how returns start to grow.

Another big plus is that there is very little cost involved and very little effort

Im not going to compare it with trading , they are two different beasts , it may suprise some to know that i do actually trade some of the more speculative stocks out there and have done rather well with the likes of sealegs and charlies , but when it comes to investing you cant beat boring. Also like shasta i found that the brokerage costs , slippage , failed trades etc soon start to compound into a significant amount.

Many may remember a thread i started around year 2000 or so entitled "ryman healthcare too boring to talk about"
At the time the stock was unloved and has since increased at least ten times in value , very boring but very profitable . At the time peope were more interested in discussing ITC or ADV etc.
Chasing quick profits and looking for blue sky can seem very appealing to many , this probably explains the popularity of CFDs etc. However the current economic downturn must of seen off many , many would be traders who were levereged and chasing quick money.
Better to be boring