“Buy and Hold”:
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The “Buy and Hold” Strategy

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An important investment strategy is "Buy and Hold" in which stocks are bought and then held for a long period, regardless of the market's fluctuations. Two additional benefits to the "buy and hold" strategy are that trading commissions can be reduced and taxes can be reduced or deferred by buying and selling less often and holding longer.

Stock Investing Tips

• Investing in stock market may be risky over the short-term, but does provide consistent and remarkable growth over the long term.
• Historical data from the past 50 years supports the Buy and Hold strategy. The logic behind the idea is that in a capitalist society the economy will keep expanding, so profits will keep growing, and as a result, both stock prices and stock dividends will increase.
• When you purchase the stocks of a company, you become owner (part) of the company and share its profits. The more shares you buy, the more ownership you have.
• Before you invest determine your investment style. There are two major variables in figuring out your investment style - your risk tolerance and the amount of time you can dedicate to investing.
• The more money you save and invest today, the more you'll have in the future.
• After getting a rough idea of how much money you'll need and how much time you have to get there, you can start to think about what investment vehicles might be right for you and what kind of returns you can reasonably expect.

Markets and sectors cycle at different times

Market sectors can perform extremely well or extremely poorly over short periods of time.

• When the overall market is declining, essentially it means that most sectors of the market are decliningas well, a bear market. While a bear market is occurring, there are still some sectors rising!
• When the overall markets are rising, many sectors of the market are rising as well, a bull market.

While a bull market is occurring, there are still some sectors declining! It is very important to know that every sector of the market cycles and not all sectors move up or down at the same time! The only way you can maintain consistently high returns in mutual funds is to know exactly when to move your money from a flat or declining sector into an appreciating sector! Knowing how to do this is very difficult indeed. In fact, without heavy monitoring and emotional discipline, it's virtually impossible! No one can accurately and continuously guess which sector is going to move up next. This is exactly what leads us to the second secret truth.

Every time investors lose money in a down market, they lose valuable time. If an average bear market reduces the value of a portfolio by 25%, a 33% return is needed just to breakeven. After eliminating overlapping bear markets, 41 years were spent either suffering through a bear market or returning to breakeven. In other words, investors spent 2/3 of their time just trying to stay even.

Buy and Hold: A word of Caution

In fact, if you missed the best ten days of the stock market from 1980 to 1989, based on the S&P 500, your return would have fallen from 17.6% to 12.7%. If you missed the 10 worst days, your return would have increased to 26.6%. In addition, missing both the best and the worst generated a 21.1% return, or a 20% better performance than buy-and-hold results. The reason this is true is the dramatic impact bear markets have on buy-and-hold investments.

A Better Way To Invest

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Amazing History Lesson

Learn from the history of the stock market and the investors before you. You see, the four most dangerous words in investing are "it's different this time". Don't fall victim to this myth!

The reality is that it isn't different this time! Investing in mutual funds is just as difficult today as it's ever been! Learn the truth about mutual fund investing...learn the history and you'll see the future!

Learn how the stock market cycles can destroy your total investment return or make it grow like never before!

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It should not be assumed that future recommendations will be profitable or will equal the performance of the past.

Learn from the Past to Earn from the Future!
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