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Buy and hold is dead, says Acuthan By Prieur du Plessis, on April 1st, 2010 posted in: Investment, Markets, Money  2 people had their say - chime in!
Lakshman Achuthan, managing director of the Economic Cycle Research Institute (ECRI), predicts (via Yahoo Finance – Tech Ticker) that the US has entered a period of “more ‘boom and bust’-type cycles,” similar to what occurred in the 1970s. He therefore believes a buy-and-hold-strategy is dead. “You don’t have to be a mad scientist,” he said; just “back off your risk in the stock market and buy bonds” if a recession appears imminent. “And if we see a recovery take more exposure and get out of bonds because the recovery is going to give you a little inflation.” However, the trick is forecasting the start of the recessions and recoveries, a skill ECRI believes it has mastered. “I’m not suggesting we’ll get it right all the time but we’ll do a lot better than ‘buy and hold,'” Achuthan said. Source: Yahoo Finance – Tech Ticker, March 29, 2010.
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Now he tell’s us ??
It’s been dead since 2001, when PE’s peaked and started contracting, signaling a Secular Bear market. It will continue to be “dead” until PE’s become cheap enough to signal expanding PE’s for the new Secular Bull market. This is old news.
If you buy at the peaks, then ‘buy and hold’ is dead. But if you manage to buy near the lows, at favourable valuations with reasonable yields, then it’s alive as ever.
I have no problems with volatility as long as it’s on the upside!