| Investment analysts say that buy-and-hold is the | | | | your money in for the long run, you have a |
| best investment strategy for the average | | | | better chance of coming out on top. |
| consumer. But do you really understand why? | | | | However, I'm not saying invest and forget. You |
| After all, the idea of a fast dollar on a stock is | | | | need to know why you invested in the first place. |
| appealing. Buy low and sell high. Do this enough | | | | Before you invest, know what your objectives |
| and you should come out on top, right? | | | | are. You need to make sure that your |
| Well, not exactly. Timing the market is almost | | | | investments are goal orientated. You sell |
| impossible to succeed at. Eventually, you will lose. | | | | investments that become inappropriate for your |
| There are some that win using market timing, but | | | | portfolio and goals and buy ones that fit in. This is |
| you have a good chance that it won't be you. | | | | buy-and-hold in action. |
| A study by the Financial Analyst Journal compared | | | | If you want to protect an investment, don't look |
| the results between market timing and | | | | at the individual stock price. Set yourself out |
| buy-and-hold strategies. The authors looked at | | | | points on the high and low side. You sell if it |
| data from 1929 to 1999. They looked at all six | | | | reaches this high or if it goes this low. If you don't |
| major US asset classes to see if market timing is | | | | set these guidelines and realize a loss, what are |
| effective when compared to buy-and-hold | | | | you going to do? Do you wait it out or take the |
| investing. | | | | loss? |
| The study looked at several different market | | | | You start over with the money you have right |
| timing methods. And what they found was that | | | | now and choose a new investment. This time you |
| sometimes it does work. Two people out of | | | | will set yourself out points. There is nothing you |
| every 1,000 will come out on top with market | | | | can do about the money you have lost, but you |
| timing. | | | | can prevent losing even more. |
| Ninety-eight percent of buy-and-hold investors will | | | | Don't hold onto stocks just to be stubborn. |
| come out on top. | | | | Realize when you made a mistake and start over. |
| The trick to making money in stocks is not really | | | | Change what you are doing so that you don't |
| found in buying and selling. It is found in investing | | | | return to this place again. Set goals. Know why |
| for the long term. Do you know what your | | | | you are investing. Know your top price and your |
| chances are in making money on a stock. You | | | | low price. And don't try to time the market, you |
| have a 70% chance that an investment in stocks | | | | have a 99.8% chance it won't work. |
| will make money in any given year. If you leave | | | | |