# Buy and hold? Not for me.



## Rusty O'Toole (Feb 1, 2012)

Tonight I revisited an old paper trading account that I last used in October 28 2014. It contained three investments, Ebay, USO and X. A thousand shares of each. Results ($19,760) ($23,830) and ($19,680) for a total loss of $63,270.

So much for "buy good stocks and put them away".


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## andrewf (Mar 1, 2010)

Is that the right lesson?


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## canew90 (Jul 13, 2016)

Those are not ones I'd consider good stocks.


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## tygrus (Mar 13, 2012)

canew90 said:


> Those are not ones I'd consider good stocks.


Good today, bad tomorrow, rinse repeat. Same thing.


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## Eder (Feb 16, 2011)

This is a joke thread haha.


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## tygrus (Mar 13, 2012)

Anyone I have ever known who got rich did so by either owning a business or real estate or sometimes both.


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## Rusty O'Toole (Feb 1, 2012)

Obviously, they aren't good stocks. But for some reason, in 2014 I thought they were. I was wrong. If I was smart, I would have sold them as soon as I found out I was wrong. That is the lesson. Buy and hold may work if you buy the 1 stock that goes up forever. If you buy one of the 1000 that doesn't, not so much.

It was only a paper trading account which is why I never looked at it for 2 1/2 years.


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## Just a Guy (Mar 27, 2012)

I find buy and hold depends on when you buy as well as what you buy. 

For example, if you bought BMO stocks during 2007/8 it dropped below $25/share while paying a $2.80 dividend. Today it's worth $96.50 and pays $3.52. So, nearly 400% return, plus paying 14% annually. 

Imagine if you'd bought apple stock or google, maybe your choices are the problem, not the strategy.


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## Rusty O'Toole (Feb 1, 2012)

That's what I said. By the way BMO was on the bargain counter because everyone knew it was invested in the US subprime mess but no one knew how bad, or whether they would be bailed out. As it happened you got lucky. The problem is no one knows beforehand how these things are going to work out.


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## Just a Guy (Mar 27, 2012)

True, no one knows the future and luck plays a major role in most investments. Back in 2007, many stocks were on the bargain counter, those who had done their research and had been following the stocks were able to capitalize on the bargains while others stayed away out of fear.

That being said, I still don't think many investment strategies are bad, they just don't work for all people. Not everyone is cut out to be a buy and hold value investor, just like not everyone is cut out to be a day trader. 

Buy and hold has worked out very well for me, but then again I use the same strategy in real estate.


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## My Own Advisor (Sep 24, 2012)

A key question to ask: what are the dividend growth histories of these companies? 

That's key to your answer of whether buying and holding these companies was a good decision.


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## new dog (Jun 21, 2016)

How many times have we talked about holding Fortis here since 2009 or before. It hasn't gone up a lot like of other stocks but it has been solid and has a solid dividend. No one knew how far the central banks would go to prop everything up but Fortis seemed like a solid company that could stand up on its own.


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## lonewolf :) (Sep 13, 2016)

Long term buy & hold would have a bad track record as stocks eventually go to zero


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## like_to_retire (Oct 9, 2016)

Two and a half years isn't buy and hold. The only product you would buy for that short time would be cash.

ltr


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## Beaver101 (Nov 14, 2011)

like_to_retire said:


> Two and a half years isn't buy and hold. The only product you would buy for that short time would be cash.
> 
> ltr


 ...+1 and besides it was set up as a paper "trading" account so why the B&H and with these growth types of stocks? Maybe this is a joke thread like Eder said since R-O'Toole seems to be savvy investor.


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## Beaver101 (Nov 14, 2011)

PS: I think B&H still works - at least for me ... bought little sweety RSI and still holding ... maybe forever or until bought out.


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## Oldroe (Sep 18, 2009)

I b&h and also buy and flip a small %. Those paper stock exercises have a short time horizon so of no real interest to me.


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## hboy54 (Sep 16, 2016)

Hi:

What material makes the best beam?

Is it a steel I beam with it's best mechanical properties including same strength in all directions that is isotropic? It is stable with temperature and humidity changes. Has to be ordered cut to length, otherwise one needs a torch on site. Costly though.

Or maybe used railway rails? Cheap as they are pulled out of service all over the place. Steel, so isotropic. An approximate I shape, so a bit efficient? But not in the building code, so you would need an engineer to run the calculations for the building inspector.

Or just plain tree trunks with two flats sawed on a band saw, local and cheap, but heavy? Very unstable with temperature and humidity changes.

Or 2x10 or 2x12s, regular sawed and graded lumber, as many in parallel as needed? Lighter than brute force tree trunks, but not local.

Too bad one can't use oriented strand board, makes use of a waste material and approximates isotropic with all the little pieces glued in random orientations. Plus much reduced temperature and humidity issues.

Consider an engineered wood I beam with OSB web and solid wood top and bottom. It has the efficient shape of a steel I beam. The web is approximately isotropic even though the top and bottoms are not, it does not matter so much there. It is workable on site with a chain saw. It is more mechanically stable with humidity changes. Does not cost much more than sawed lumber. It really is parts of all the other possibilities.

People are always looking to "prove" why what they do is best and other techniques are inferior. I look at the various investing ideas and methodologies as theoretical models that don't necessarily exist in reality, but still present useful ideas to apply.

Buy and hold? Nobody has ever on one day purchased a single portfolio and come back 50 years later to see how they did. But the idea of trying to hold the same things over decades with little attention is useful. Needs less ongoing reading and research vs always hunting for new opportunities. Not zero attention, as I am always happy to add more on the cheap, and sell some back when the chance comes by.

Dividends? Sure, why not. Provides some corporate discipline over no dividends. I get some cash coming in that I can choose between consumption, reinvesting in the same company, or investing elsewhere. Nice tax treatment, especially for someone with zero employment income.

Dividend growth? Surely growing dividends is a good thing.

Materials stocks? Over the cycle can be painful, but if I can get me some cheap in a good panic, why not? Nobody says I have to hold through the cycle, or have to hold all I ever purchased.

Financials and utilities, so called "safe"? Sure, they provide long term relative stability and pretty good returns to boot.

I most of the time invest in certain ways with certain stocks, but I am not dogmatic about it. I like to think that I try to observe the truth of the investing landscape and adapt to it. So depending on circumstances I jump on one or another of the ideas above, and others, to a higher degree than the static situation.

All investing models above and others not mentioned have their place in the tool kit. Different situations work better with different tools.

hboy54


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## Eclectic12 (Oct 20, 2010)

Rusty O'Toole said:


> ... Buy and hold may work if you buy the 1 stock that goes up forever ...


Not sure anything goes up forever ... though I seem to be well over the "1 stock" mark. :biggrin:


But then again, some stocks were held for a few months, some a few years and a few for decades so I try to fit the approach to the stock/company business.


Cheers


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## Rusty O'Toole (Feb 1, 2012)

Beaver101 said:


> ...+1 and besides it was set up as a paper "trading" account so why the B&H and with these growth types of stocks? Maybe this is a joke thread like Eder said since R-O'Toole seems to be savvy investor.


Thank you for the nice compliment. If I am a savvy investor it is because I keep learning, and try to find a style of investing that suits my personality. When I pulled up this old account it hilited a couple of things for me, one is how much I have learned in the last 2 1/2 years and another is how I don't like holding a stock that is going down.

I agree that buy and hold works better in real estate. Every property I ever sold ended up going up a lot, usually right after I sold it. Not so much with stocks.

I posted it because I thought it was interesting food for thought, and might spark some intelligent comments on the pros and cons of different investing styles.


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## kcowan (Jul 1, 2010)

For me, a B&H stock has some specific properties:
- a history of regular dividend increases 
- healthy earnings coverage of their dividend
- operating in a sector that supports continued profits
If any any of these indicators stops looking good, they go on a watch list until they turn around (2 quarters), or they get sold. This review happens once a year at rebalance time.


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## Argonaut (Dec 7, 2010)

Part of the reason this didn't work well is that it was a paper account. Contrary to some of the noise out there, I think real money on the line lets people make better investing decisions. Like Rusty said, he didn't bother looking at the portfolio for 2.5 years. I remember one time I was in a paper trading competition and made the right call on some put options. I didn't even bother cashing in the trades though because I had better things to do with my time. You can bet if I had real money on the line I would have been online at market open.

Also a note for people looking at this thread, USO doesn't track the price of oil properly and should never be bought ever, much less for a buy and hold investment. The other two choices had obvious problems with them, and the investor would have realized it faster with real money and tried something else.


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## olivaw (Nov 21, 2010)

IMO, You can buy and hold individual stocks but you need to constantly watch them for signs of trouble. 

I prefer broad based index ETFs. They can be ignored indefinitely.


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## My Own Advisor (Sep 24, 2012)

olivaw said:


> IMO, You can buy and hold individual stocks but you need to constantly watch them for signs of trouble.
> 
> I prefer broad based index ETFs. They can be ignored indefinitely.


Yes and no I think. You will still need to consider your asset allocation, when to buy more, when to sell as part of total return to income approach, and other factors. 

The biggest difference between a basket of individual stocks (concentration) and many stocks inside an ETF/fund is diversification - the same thought process should apply.

I meant to add, besides, I don't believe there is a such a thing as a perfect portfolio. Great results by many index investors only exist in hindsight because they didn't tinker with their portfolio very much (behaviour) and they manged to invest at a great time (more behaviour). What will be is what will be, individual stocks or otherwise holding hundreds of them for a small fee.


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## Just a Guy (Mar 27, 2012)

With me, I don't look at balancing my portfolio, I don't look at asset allocation. I look for things I know and understand when they are on sale. 

I do look at the big picture of my holdings, looking for signs that something has changed in the landscape or with the company...for example, Yellow pages has been in a dying market for decades (not even sure if they still exist as a company, but I remember someone telling me to get in on it when it was low), and has no hope of surviving long term...back before the internet though, they may have been a good company to hold. If I'd held them and saw the early days of the internet, I probably would have sold had things stayed the same with their market, I probably would have held.

The reason I don't worry about a balanced portfolio or my allocation is I never understood the idea of selling your winners because they were doing too well. That was just silly to me. If they do well, and nothing on the horizon says that's likely to change, I'm not going to worry that immmaking too much money in one area.

Then again, I don't look at my assets by their current value. I only know what they're worth when I sell, everything else is just on paper, I don't get excited about on paper wealth. I care about how much they cost me, how much they put in my pocket (dividends) and that's about it...much like real estate. Paper wealth just inflates one's ego, but it can always disappear overnight.

When I buy investments, I consider that spent money, as in gone forever. If I'm wrong, and it's worth more in the future great. If I'm not, I don't lose sleep over it and I don't wonder how I'm going to make ends meet going forward.


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## Oldroe (Sep 18, 2009)

Laidlaw was a great div cash cow. The bought ambulance service and Grey Hound bus. The guy in charge of ambulance division said he didn't know there was so many regulations to the biz. Greyhound guy didn't know bus travel was declining. Nobody went to jail they just went broke.

So mindless hold not option.


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## mordko (Jan 23, 2016)

My Own Advisor said:


> Great results by many index investors only exist in hindsight because they didn't tinker with their portfolio very much (behaviour) and they manged to invest at a great time (more behaviour). What will be is what will be, individual stocks or otherwise holding hundreds of them for a small fee.


- Behaviour is important. Very true.
- Timing - not important. Trying to time is the exact opposite of correct behaviour. Timing reduces returns. Doesn't matter when you start to index, the returns will be good - over the long term. That's what the theory is all about. The whole point of couch potato is that you do NOT attempt to time the market.


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## Oldroe (Sep 18, 2009)

you guys make me laugh.

Read one stupid thing and repeat.


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## humble_pie (Jun 7, 2009)

olivaw said:


> IMO, You can buy and hold individual stocks but you need to constantly watch them for signs of trouble.
> 
> I prefer broad based index ETFs. They can be ignored indefinitely.



disagree about "constantly" watching the stocks. In canadian stocks, most folks should be holding the same big/old/stable companies as the indexes.

there are people who preach - even in cmf forum - that individual stock holders need to spend their days, nay even their nights as well, analyzing all the financial statements of their holdings.

me i think that is a ridiculous idea. There are armies of talented, skilled CFA analysts out there who do this kind of work on a professional basis. Then there are squadrons of talented, skilled finance journalists who will routinely interview & report on what these analysts are saying. Literally an hour after earnings news comes out, the journos have got full stories online, with a plethora of commentaries.

ordinary investors only need to read the news. Enough news to pick up the range of professional opinion, all the way from view A to view Z. Everything will be there, in the news.

why would an ordinary investor think he can invent a better financial analytic wheel, when he's not even trained in the sector?

take canadian banks. Everybody owns canadian bank shares, even if only through their eventual interest in the canada pension plan. Nobody understands, from banks' audited financial statements, much of what a big canadian bank is up to. From an avalanche of media reports, though, an investor can pick up a range of insights. He will find a spectrum of analysts suggesting - each analyst providing serious, lucid, cogent reasons for his choice - everything from Dump Banks to Buy Banks Aggressively on Drops.

same thing for telcos, oilcos, utilities. More than enough information proliferates in the media. No need to re-invent the wheel.

as for the small caps, here relying on anybody gets dodgy. Here i think an investor would do better with a QQQ or a russell 2000 ETF, or a mutual fund with an outstanding history of specializing in small caps.

.


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## humble_pie (Jun 7, 2009)

lonewolf :) said:


> ... stocks eventually go to zero



:biggrin: i think i'll make this my next signature line

.


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## Rusty O'Toole (Feb 1, 2012)

"Nobody went to jail they just went broke."

How many times has this happened lol. Even when they bring down the world economy they get bailed out - with our money - after losing our money.


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## digitalatlas (Jun 6, 2015)

Rusty O'Toole said:


> "Nobody went to jail they just went broke."
> 
> How many times has this happened lol. Even when they bring down the world economy they get bailed out - with our money - after losing our money.


No they don't "lose" our money, that implies it just disappeared and no one knows where it went, like when you lose a sock in the dryer. The top executives pocket the money and it gets shuffled into offshore accounts, so it's not technically "lost" now is it?


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## jargey3000 (Jan 25, 2011)

....hmmmm...this thread's got me to thinking.....haven't checked the value of my Nortel & Valeant shares lately, which i bought a long time ago & held, & held..


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## Just a Guy (Mar 27, 2012)

I remember, when Nortel was on its way to the moon, sitting around discussing how nortel would sell equipment to a company, then loan the money to buy the equipment to the company and, upon reading their financials, discovering that boy the sold units and the loans were being declared as "profits". It wasn't very hard to find if you looked for it, and why I steered clear of the company. I suppose others were too busy buying the trend instead of doing basic research. I also avoided Enron, worldcom, breX, sinoforrest, and a whole lot of other highly touted stocks because they didn't pass the sniff test when I looked into them...but I'm sure it's the buy and hold strategy that was at fault.


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## Oldroe (Sep 18, 2009)

I rode the Nortel for a couple profits. It was never buy and hold for every. 

Canadian banks I likely die with them.

The weed stocks are the next example. The old dope smokers are keeping the price up and the crash just a matter on time.


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