click for video


Note my 5 stages of grief meme has taken hold:

The five stages of death are denial, anger, bargaining, depression and finally, acceptance. We bring it up, because right now, Wall Street is really struggling with that last one, acceptance.

We’re talking about the death of that time honored investment strategy, buy-and-hold. Investors just can’t let go, and they need to.

Thanks to black October, the S&P 500 has now lost a fifth of its value over the last 10 years. According to Jeff Macke, “2008 is the year that will go down in history as the year that long term investment died as a thesis.”

And that means it’s time to move on.

But just because buy-and-hold is pretty much dead and buried, that doesn’t mean you can’t make money anymore.


The Death of Buy and Hold
Lee Brodie

Category: Apprenticed Investor, Investing, Markets, Psychology, Video

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

17 Responses to “The Death of Buy and Hold”

  1. jmborchers says:

    I’m all covered up and in long. Let’s see how she goes.

    Yeah buy and hold was never good and never has been.

  2. Zignals says:

    The same thing was probably said in 1932 too and buy-and-hold didn’t work too badly since then.

    It’s not buy-and-hold is a bust, it’s a question of when you bought and when you sold.

    Every long trader is a buy-to-hold in essence; just the time frames are different.


  3. slimsam says:

    This is the strongest Buy indicator I’ve seen in quite some time.

  4. Steve Barry says:

    You better hope 840 holds on the S&P. You are playing with lit dynamite.

    But watch CNBC, where we are always “off the lows” and you won’t go wrong.

  5. Steve Barry says:

    Now the bailed out companies are begging for better bailouts…how can they say no to them?

  6. jmborchers says:

    The more oil falls the more comfortable I get being long.

  7. Steve Barry says:


    Oil is falling due to a surging dollar, which will kill multi-national earnings growth.

  8. Mike in Nola says:


    Nobody expects earnings growth in the short term. You’ll get a rally if earnings are just not as bad as expected. Of course, if Bush wasn’t being such a simple pr__k about the GM matter there might be a rally now.

    He could be negotiating for a restructuring of GM and Chrysler based on some principled stance, e.g. an esop buyout and a way to get rid of the labor liabilities in exchange for an injection. But, instead he’s tying a simple giveaway to the car makers to exporting more jobs in a Columbia trade deal.

  9. drtomaso says:

    This is actually something I started thinking about when comparing the current US08 crisis to JP89. Is there any talk in academic circles about this?

    It always seemed silly to me when financial advisers talked about the power of compounding when selling me on their 401k plans. The assumption they instructed me to make was somewhere between 8%-12% (depending on the year) which represented the “long term average return of equities.” That always seemed to be extremely optimistic to me- reasonable given the history of the market thus far, but how likely is such a trend to continue?

  10. mlomker says:

    jmborchers, I’m with you. This wave C may not be completely done but it has lost energy. Squeezing every dollar out of a correction doesn’t make sense if it means missing the impulse move.

  11. Mark Wolfinger says:

    Buy and hold has been dead for years. At least IMHO. I wrote an article in 2003 entitled “Buy and Don’t Hold.”

  12. DP says:

    Wouldn’t 2003 have been a great time to buy and hold? (until 2007) :)

  13. LM Capital says:

    Jeff Macke is an idiot who talks too fast in order to say something worth listening to. As a matter of fact, so are the rest of the “traders” on that show – if you showed them an Income Statement they wouldn’t know where to find profit margins. I am quite surprised that this great blog features their stories and gets support from its readers.

    Moreover, go back to the bullish calls they all made just a few months back, there is no accountability for these kind of journalist who come up with 10 new and bad trade ideas every day. These guys have the intellect of a 5-year old, lacking the patience to do fundamental research. If looking at a few charts and P/E figures would lead you to fortunes – we would all be rich already and they wouldnt waste their time on that tv show.

    I hope to never see Fast Money on here again so I can enjoy the quite valuable pieces that Barry provides most of the time.


  14. Jojo99 says:

    Nice chart here:
    S&P 500 Timeline of the Great Depression

  15. BG says:

    Buy and Hold is only for suckers who haven’t figured out they are the ones being had.

    Buy and Hold died the day retail investors could trade electronically from home on their PCs. The pace and the hold time just got quicker and more narrow, respectively.

    Let’s not kid ourselves, it’s nothing more than a global casino. Where’s Pesci & DeNiero? “Are you kidding me?”

  16. Greg0658 says:

    “global casino” yep thats what I been sayin
    and socialized losses – thanks to the nanny state and “NOT off with their heads” repossesion laws

    if only I new then what I know now ( I think thats a song lyric )
    the kids of today are probably in for a rude awakening when the boomers get done

  17. jeffmacke says:

    “Idiot” LM? Ouch.

    If you bought when you posted you’re only down 12%, now that we’ve had a 20% rally. If you bought when I first said “buy and hold is dead” you’re down much more.

    Either way, avoid that “sell” key at all costs. When they turn off your heat you can warm yourself by calling me names and fueling your furnace with the rage of you just knowing that you’re right, darnit, not matter what the numbers might be telling you.

    The S&P 500 is down 38% for the last decade (yes, including the rally of the last month). The index is up almost 3% for 12 years. So, you’ll be very slightly ahead of inflation over the next decade, unless, of course, hyperinflation vaporizes your savings or investments.

    Project that over several centuries and you’ll be easily breaking even and then some!

    It’s my fault.