Why You Should Stick With `Buy and Hold’
Beware of those who claim they have a strategy to capture the upside of market volatility and avoid the downside.
Bloomberg, November 9, 2018
Wouldn’t it be great if for only a few pennies on the dollar, you could insure your portfolio against market volatility and drawdowns?
That is a pitch which seems to come along every time markets become a little volatile. There is no need to suffer through a long down period via “Buy and Hold,” critics of indexing admonish, if you only you were to buy our product/newsletter/hedging strategy. It is an alluring pitch that seems to push the emotional buttons of many.
Investors may have read Stocks for the Long Run or a Random Walk Down Wall Street, but it does not take much in the way of market weakness to make some doubt their philosophy.
These investment strategies advertise that they can capture the upside while avoiding the downside of market volatility. If only . . . Doing this is much harder than advertised and for a variety of reasons. Today, we discuss those reasons.
I originally published this at Bloomberg, November 9, 2018. All of my Bloomberg columns can be found here and here.