Over the years I have observed that there are many ways to earn a good return in the market. In addition to buy and hold, some have successfully used various forms of market timing including sector rotation, momentum investing, technical analysis, et. al. Given a person's unique makeup, not all strategies will work for everyone. At the same time, I believe all strategies will fail if the investor is not committed to their selected strategy over the long term.
Recently, Kiplinger published an article looking at a successful market timer and contrasting it with a buy and hold strategy. Below are some key bullets from the article:
As I mentioned above, not all personalities are suited for each type of investing. It could be financially deadly for a compulsive personality to engage in day-trading. At some point the line is crossed between investing and gambling. Like the compulsive gambler, a compulsive day-trader could go broke trying to "win" back their losses.
Buy And Hold Dividend Stocks
Personally, I prefer an investing strategy that requires less daily attention. As a long-term, value-based, dividend income investor, daily market gyrations are just irrelevant noise in the system. Below are five dividend stocks you can buy, hold and sleep at night:
Ultimately, each investor must define what works best for him or her, and have the conviction to stick with it during the good times and the bad. Often the good times are preceed with some very dark days, and if you quit too soon you might just the good time.
Full Disclosure: Long ABT, EMR, JNJ, MMM, UTX. See a list of all my income holdings here.
Related Articles:
To Buy And Hold or to Time the Market
Posted by D4L | Thursday, July 23, 2009 | commentary | 0 comments »________________________________________________________________
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