Is " Buy and Hold " Investing Dead ?

[Smart_trade]

ST bro can we have some more clarification on this in finding these companies

Pravinbhai, if you study last 10 years balance sheets of some of the wealth creators like Nestle,Asian Paints,TTK Prestige,TCS,Wipro you will find that there is a definite relation between period of fast growth in earning and the increase in share price follows this period. Such companies give CAGR of over 18-20 % and investment in such companies can beat any other investment like real estate which gives a CAGR of less than 10 % on long period.

Smart_trade

 

[Einstein]

balance sheet don't show earnings, you might mean p&l statement.

 

[jamit_05]

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1)Is "Buy and Hold" investing really dead?

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It is a valid question. I will try to answer it.

US, as an economy, is growing slowly be less than 1.5%. Whereas, Japan is stagnant. In that light, India's consumption story on all fronts is growing fairly rapidly by say 6 to 10%. Every year, several thousands of Indians want to buy their first cell phones, computers, laptops, homes, cars etc.

Coming back to your point of whether "Buy and Hold" investing is dead. As long as we have this growth in national demand, our companies will have to increase their production capacities, which in turn will increase EPS. And as long as EPS is increasing Buy and Hold kind of investing will be the ONLY form of investing that will give an investor the full benefit of the process.

 

[amitrandive]

No Buy and Hold is not dead, simple because few over priced scrips refused to go up doesn't mean investing is dead, hate to do this again but if you've time go through my thread.

http://www.traderji.com/fundamental...g-traders-investors-faith-into-investing.html

If you have any question just ask me rather then criticizing. peace!!

edit

1)Is "Buy and Hold" investing really dead?
Ofcourse not!!

2)Does the retail investor now have to think like a swing trader?
New investors surely do, but swing investing is also trading right? no wonder these so called investors loose money without doing proper homework, Only when the tide goes out do you discover who's been swimming naked.

3)How to identify weakness in the companies,book profits/losses and exit at the right time?
Mr. G had a wonderful thread few months ago about valuations and investors physiology. you'll find your answer there.

4)For a long term investor what should be the frequency of portfolio review and portfolio churning?
I don't look at my portfolio every day, but I do keep eye on quarterly report and make sure that the company is doing as I expected it to do.

Einstein

Thanks for the replies and providing the links.
Long term investing needs important parameters to be identified on basis of Fundamentals/Technicals/MacroEconomy.Can you please provide an idea about this ?

 

[amitrandive]

Ironically this question is hypothetical...

Buffet said "market is designed to move money from speculators to investors" long back but now the time is changed due to technology...constantly money has been taken out the system...
I have seen some of the scalpers doing better than invested...
PASSIVE involvement in market by default BUY AND HOLD and vice versa...
NOW its a time for LONG AND SHORT CONCEPT...

are we looking for RELATIVE RETURN OR ABSOLUTE ONE IS THE QUESTION????

3 points here is

1. Investing or trading ONE HAS TO BE RIGHT
2. while Trading you do more ATTEMPTS but INVESTING is with less number of ATTEMPTS
3. MM is must in trading as well as DIVERSIFICATION in investing

I am in favor of LONG AND SHORT CONCEPT... and i think majority of funds...

Rest is that buy and hold is on HOLD for now as per me:thumb:

toughard

I fully agree with you on this.

Another article which I read in The Times of India on the same day.

If "Buy and Hold" actually made money,why have the Professional Fund Managers not been able to take advantage of this.Just a food for thought.

Not St savvy, retail investors miss rally
Equity MF Participation Lowest Since Mar ’07

The sensex is on a roll: the index has breached the 23,000 mark for the first time, the nifty has closed above 6,850 points, small and mid-cap, banking and capital goods indices have generated double-digit returns so far in 2014. But where are retail investors? Even as experts are predicting new peaks for the markets, retail investors have given the rally a complete miss.
About 40 lakh folios or investor accounts were closed in the equity mutual fund (MF) segment in 2013-14. Investor accounts in the equity MF category have slumped to the lowest level since March 2007 during the period.
“Retail investors completely missed the bus as they have not understood the dynamics of equity markets. They don’t understand market cycles,” says Suresh Sadagopan, founder, Ladder7 Financial Advisories. “The fact that markets did not improve for a long period played on their minds keeping them away,” he says.
The total number of investor accounts with share depositories NSDL and CDSL, which dropped by 60,000 in February alone, has improved only marginally in March. While the number of investor accounts declined 0.1% to 130.6 lakh in March at NSDL, it advanced 0.5% to 87.8 lakh in CDSL. Investor accounts at these depositories have dropped by 20,000 in February-March. The number of accounts with these
depositories increased marginally in 2013-14. The number of depository participants with NSDL has also come down from 282 in March last year to 278 now. These participants have only 14,444 service centres compared to 14,641 in March last year.
Participants have presence only in 1,566 cities and towns, down from 1,581 a year earlier. “The last mile connectivity is not well developed. Investors don’t know where to get proper financial advice when markets go up or fall,” says Sumeet Vaid, CEO, Ffreedom Financial Planners. “There is a dearth of good advisers. Lack of proper financial advice is the biggest stumbling block. Unless financial advice comes, people will continue to act on their own,” he says.
“Retail investors missed it out as the rally was sudden and sharp,” says Anil Rego, CEO, Right Horizons, a wealth management firm. “It is more behavioural in nature. Investors want to cash out when the markets are at a high but don’t buy when they are trading at lower levels,” Suresh says.
With the markets remaining lacklustre for a long time, investors started comparing equity returns with that of bank fixed deposits, say advisers.

 

[amitrandive]

you are looking at very short time frame, buy and hold will still work good if we have a bull market.

Vertigo_1985

Is 6 years really a short time frame?If I would keep my money locked in the markets in Blue Chip Stocks for 6 years and not get any decent returns what is the use of that?
Better to keep money in FD's or other such debt instruments

 

[amitrandive]

Do investors use any stop losd to exit ?

SL is a taboo word for them, they only think the price will go up,even if the company is no more

:thumb:"risk is nothing but the permanent loss of capital" buffet

INSTEAD OF STOP LOSS MAX USE AVGING HERE PROBLEM STARTS IF STOCK IS GOOD THEY EARN AND BECOME EXAMPLE IF NOT WANDER IN FORUMS LIKE THIS:rofl::rofl::rofl::rofl:

Dear All

I sincerely believe that Savvy investors do use stop losses and targets also.The rest(read not investor savvy) of the investors buy,hold and hope.They never even care to check the health of their portfolio.Wonder if they really have any plans for profit booking anytime?

With the advent of Algorithmic trading,Scams,etc the time has come for the investors to review and churn their portfolios at-least on a quarterly basis.

 

[amitrandive]

If one keeps an eye on company results every quarter and see growth in earnings,management quality,dividend distribution,leadership position...one can make good investments for 1-2 years.

Fundamentals change with time. Many of previous bluechips are laggards today and few new winners will emerge in future. So we have to keep constant watch on the performance of companies in which we invest.

Smart_trade

Smart_trade Sir

Thanks for this piece of important advice.What you have defined in this short write up sums the way new "Buy and Hold" investing should actually be.

We just cannot invest and sleep around for years without reviewing and just hoping for money to grow.

For an interesting read , I have provided two links from blogs.

http://www.michaelcovel.com/2012/04...-fair-fight-really-who-said-fights-were-fair/

http://reznywealthreportdotcom.wordpress.com/2012/06/12/buy-and-hold-anyone/

 

[jamit_05]

toughard

I fully agree with you on this.

Another article which I read in The Times of India on the same day.

If "Buy and Hold" actually made money,why have the Professional Fund Managers not been able to take advantage of this.Just a food for thought.

Professional Fund Managers are a nefarious breed. They ONLY agenda is to fulfill their personal income targets. And along the way, if anything is left, they pass it on to the investors that depend on them.

It is a well known fact that the Mutual Fund Industry as a whole has underperformed the leading indices by a large margin.

 

[amitrandive]

Pravinbhai, if you study last 10 years balance sheets of some of the wealth creators like Nestle,Asian Paints,TTK Prestige,TCS,Wipro you will find that there is a definite relation between period of fast growth in earning and the increase in share price follows this period. Such companies give CAGR of over 18-20 % and investment in such companies can beat any other investment like real estate which gives a CAGR of less than 10 % on long period.

Smart_trade

Smart_trade Sir

100% agree on this.I want attached some financial graphics for Asian Paints for the last 10 years(name of website withheld).This is a rare kind of winner which has shown consistent performance.
Asian paints has outperformed Nifty by a phenomenal amount.

Also the capital appreciation of the scrip value and dividends reflect this performance.
:clapping::clapping::clapping:

Asian Paints for 10 years