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IMO- I wouldent touch GM....Although I didnt understand why it was still holding around .70 on friday when they will file bankrp. on Monday -
Bye-Bye To Buy And Hold
CNBC Published: Monday, 18 May 2009 | 12:15 PM ET
The time-tested buy-and-hold investment mantra has become so unpopular that even those who advocate the strategy don’t refer to it by that name anymore.
Now terms like “buy and harvest” and “buy and trade” have replaced the old “buy and forget” philosophy once so popular among active stock market investors.
The change reflects a spreading attitude that in an age of 24/7 financial news and information, which can mean tremendous volatility, it no longer makes sense to buy a stock and then check back on its performance five, seven or ten years later.
“The buy-and-hold and passive investing approach works really well in certain environments and not so well in other environments. The ‘80s and the ‘90s were a good time for buy-and-hold,” says Matt Havens, partner with Global Vision Advisors in Hingham, Mass. “There’s benefit now to being more active in your management style.”
Investors who held tight during the contagion of the credit crisis saw their portfolios decimated by the market’s multiple gyrations that generated losses of more than 50 percent for the major indexes. Even the most bullish of investors acknowledge it will take years before the market returns to its record levels of October 2007.
At the same time, those who were nimble enough to get in and out of positions at least gave themselves a chance to mitigate losses.
Emily Sanders, president of Sanders Financial Management in Atlanta, uses General Electric [GE 13.36 0.50 (+3.89%) ] (CNBC.com's parent company) as an example of how its “buy- and-trade” strategy has worked.
At its worst, GE shares had lost 82 percent of their value, before investors became convinced the company could regain its footing and overcome losses sustained primarily at its GE Capital financing arm. Since the March low the stock has more than doubled in price
“When something like GE presents trading opportunities due to severe gyrations, then it really calls into question the whole buy-and-hold-and-forget-about-it strategy,” Sanders says. “You can’t forget about anything. Nothing can be taken for granted, not even in the soundest companies.”
At the same time, though, trying to pin the tail on a stock that is in free fall may not be that feasible for a typical retail investor.
Most portfolio managers shudder at attempts to try to time the market as a whole and even particular stocks, choosing instead to find value levels or technical points – or sometimes a combination of both – to determine when to buy and sell.
Meanwhile, the individual investor has to decide whether to follow the strategy employed during the massive bull markets of the late 20th century and avoid even looking at daily stock quotes, or confront today’s reality of volatility sometimes four and five times higher than historical norms.
“The definition of buy-and-hold tends to be a little fuzzy,” says John Buckingham, chief investment officer at value-based Al Frank Asset Management in Laguna Beach, Calif. “A lot of people think that means you buy something and do nothing for years on end. That’s not a strategy we’ve ever implemented.”
Yet Buckingham would include himself in the buy-and-hold camp – sort of.
Buckingham describes his firm’s strategy as “buy and harvest,” a term that he says entails a long-term investment horizon but with the flexibility to be “following the money.”
“The strategy is sound--buying undervalued stocks and selling overvalued stocks,” he says. “Unfortunately, some people will confuse that with buy-and-forget as opposed to buy-and-continue-to-monitor.”
“In this volatile environment, you can have financial stocks that appreciate 100 percent in a week,” explains Buckingham. “To not try and take advantage of a move like that, you’re not doing your job as an active manager.”
But if “buy and harvest” with an active manager is still beyond one’s appetite for risk, there’s always the passive management strategy advocated by Charles Massimo of CJM Fiscal Management in Melville, N.J.
Even at CJM, though, “buy-and-hold is only part of the equation,” admits Massimo.
Portfolio rebalancing that reflects investor priorities is the key, so the thinking goes. Maintaining a balanced and diverse investment outlook takes precedence over following market gyrations, so that goals are met and risk is minimized.
That means if bonds should do especially well during a particular period, that asset class naturally would take on greater weight in the portfolio. Subsequent rebalancing would shift the portfolio more towards equities, allowing investors to take profits from the growth in bonds while positioning for a gain in stocks – “buy and hold and rebalance” as it were.
“What that accomplishes is the client never takes on more risk than they agreed upon,” Massimo says. “The second thing it forces us to do is to sell high and buy low, because we’re selling that asset class that performed best and rebalancing towards the asset class that performed worst.”
“Nobody was rethinking anything when the market was going up, and now that markets are doing what they often do – go down – all of a sudden everything is out the window, and I think that’s ridiculous,” says Matthew Kaufler, equity analyst and portfolio manager at Federated Clover Capital Advisors in Rochester, N.Y. “You don’t shoot your favorite dog just because he’s old.”
To the contrary, says Kaufler, who believes that a market pullback is time to add to positions of good companies that get beaten down – “buy and hold and buy the dips,” perhaps.
For some managers, though, what it all comes down to is finding the best way to make money without letting emotions interfere. So, if that is buy and hold or buy and harvest or buy and ask the computer, then so be it.
“Without a crystal ball, I think investors still need to have a more active approach, but with the caveat that it’s going to be an approach that’s systematic to the extent that your emotions do not factor into the decision of whether you buy and sell,” says Matthew Tuttle, president of Tuttle Wealth Management in Stamford, Conn.
Tuttle relies on computer software to tell him what to do. “We take all of our creativity and all of our discretion and we design computer programs, and the computer programs tell us when to buy and when to sell,” he says. “The queasier I am when the computer tells me to do something, that’s usually when we’re going to make the most money.”
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I havnt sold them, i have them wasting away though. I wasnt around to sell on the spike and it has yet to recover since falling. Ive averaged down a bit with what i made from GNTA so this one is almost even, it keeps droping but sooner or later itll push up a bit and i can at the very least even up.Leave a comment:
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"That's what I'm talking about"! :thumbs: Many are selling their stocks due to losing their jobs and need to pay bills. Many selling due to loss of confidence in the market. Many other reasons! I'm buying more and more, sooner or later this **** will turn around, and I will be sitting back watching my positions grow! :beer2:Leave a comment:
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I had this same problem when I was starting out actually, you just really gotta figure out a trading strategy that works for you and go from there. I use a style similar to HD's, that I look for stocks that have had BIG price declines and try to buy them at the bottom and if not just average down and wait for a pop.
Here is another good site to use to find the days biggest droppers in the markets: NYSE Biggest Percentage Decliners - Markets Data Center - WSJ.com
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What? How did you lose on NVAX? You sold it? I NEVER EVER sold a stock at a loss, NEVER! Average down, wait till you get up, then sell! ALL stocks have their ups and downs, If you bought it on the way up and it comes down, BUY MORE! Sooner or later you'll be up! :thumbs:Leave a comment:
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Yup that sounds stupid! :laughing:
Most every stock is down under 52wk highs!
I use alot of different sites, I look for BIG losers, buy them when they are oversold or hit 52wk lows. Many stocks drop hard due to changing exchanges, bad news, short selling, etc.etc. etc... I will also buy stocks that suddenly get huge increase in volume, I look at the pps and volume history, before I buy.
Here's a good site for you to find good info, read the posts and research the stock, just dont buy in when the stock has already been pumped up, catch it before that happens, or wait for the rebound.
BB's Stock Haven Message Board
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How do you find your stocks. I know it probobly sounds stupid but im having a hard time finding stocks i want to buy.Leave a comment:
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:dunno: I sold at .0205 yesterday. I'm holding over 100 different stocks right now and watching at least that many too! This has been a crazy week "pump & dumps" all over the place, symbols changing, BK filings, etc.... Just buy it low and when you see a nice bounce, SELLLLLLLLLLLL. :thumbs: MGLG is another crazy mover, I bought in @.0002 x500k, hit .0033 yesterday, then the bottom fell out, closed at .0017, then opened at .0027 today, then down again. :nuts: I enjoy it though! :beer2:Leave a comment:
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Bought back into GNTA @ 0.0102 today with the anticipation of some news coming out tonight it may go up in AH and open at a nice high tom morning.
AMNE im trying to get in as low as i can right now trying @ 0.0125 and hoping it falls to that number.
Whats your take on AMNE. What do you think they have the potential to move too?Leave a comment:
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GM and Ford are the last 2 of the 3 major automotive companies standing in the US. Do you guys think the US government is going to allow a 2nd company to fall. Them filing for bankrupcy is almost inevitable, but i really dont think its going to die.
I want to buy into this puppy in the next coming days maybe weeks when it hits less than $1 and hope they pull out of it. With that being said i want to jump on ford aswell and if GM goes down this time next year with only ford standing it should pay off to have purchased stocks in them at this current price.
What do u guys think?Leave a comment:
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I sold mine today at 0.0223 after buying at 0.0072 dubling the 400 i invested so was more than happy. I actually see it going up in the morning then after the conference which i really dont see any news worth while coming from it, i see it droping again but probly not under a penny again. thing with this is i wanna buy in again after the drop in a couple of months and hold long term untill the FDA approval date which im banking on them getting approval.Leave a comment:
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