Why Buy and Hold?

Since I can remember, and that's a long time ago, the Wall Street brokerage companies, mavens and mutual fund managers have been exhorting the mantra of Buy and Hold for all your investments. There have been erudite studies published that this is the only way to go.

Does it really work or has the little investor been lied to all these years. Of course, you know the answer if you have owned any stocks or funds for the past 3 years. From my analysis the latter is true. The big boys buy and sell all the time. If you look at the executives of companies it seems they all know when to sell ? right at the top before their own company stocks decline. This is easily proven, as the SEC requires all listed-company executives must report both buy and sell transactions. It is not the same as an "insider" sale, but it might as well be, as those guys know if the company is making or losing money. The past couple of years the preponderance of stock sales has been on the sell side.

These sales are easily understandable, but why do brokerage companies want you to buy and hold, especially hold? There are 2 reasons. First, they want to move inventory out of their ownership to you. That transfers the risk and now they have your money.

Even more important, when you HOLD there is less stock for sale, less "float" (fewer tradable issues), and that means it takes less money to manipulate that particular issue.

Also fund managers don't want you to sell their fund once you have bought it because they get paid on the amount of money in the fund not on the performance of the fund. This is a great rip off of the investor causing him to hold an asset that is worth less and less. Many of the large fund managers are paid 7 figure salaries. How can a so-called professional manager receive more than a million dollars to lose money for his clients? Yet, they do!

Buy and hold is a farce perpetrated on the small investor. There are 78 million mutual fund owners and 80% of them have less than $50,000 in their accounts. No one ever says SELL.

Here is one more fact you will not read in the financial media. Mutual funds only work during bull markets. The bull market that started in 1974 (some say 1982) definitely ended in 2000. The longer a bull market is in effect the longer is the bear market that follows and is usually about the same length of time. Scary, huh?! But true.

Now what? Buy and hold? The facts speak for themselves. If you are not a trader the safest place for your money during the next several years is in U.S. government bonds. They won't pay much, but you won't lose your money as this bear eats away at the stock market.

Al Thomas' book, "If It Doesn't Go Up, Don't Buy It!" has helped thousands of people make money and keep their profits with his simple 2-step method. Read the first chapter at http://www.mutualfundmagic.com and discover why he's the man that Wall Street does not want you to know.

1-888-345-7870; [email protected]

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Top 30 stocks that fund managers bought & sold in March; do you own any?  Moneycontrol.comData for equity flows into a mutual funds for March came as a breather after a weak February. Increase in net inflows in equity and income category led to the ...
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The dangers of high mutual fund inflows  LivemintMutual funds have put ₹2.4 trillion into markets in the last two years.Equity mutual funds receive ₹8000 crore monthly through SIPs.
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I want to invest Rs 1 crore in stocks and mutual funds for 5 years. How should I invest?  Economic TimesYou may consider the following asset allocation: 40% in large-caps; 40% in large and mid-cap, or multi-caps; and remaining 20% in mid- and small-cap funds.
A look at mistakes committed by investors of equity mutual fund schemes  Moneycontrol.comBalwant Jain. The interest of investors has been shifting from direct equity investing to equity mutual funds over a few years. Though this is a welcome trend, ...
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Here’s a better tool to judge mutual fund performance than simple 1-year, 3-year returns  Economic TimesOne invests in mutual funds to earn potentially higher returns than those in traditional investment products, and I'm sure everyone looks at the one-year, ...
Should you build a diversified portfolio with just passive mutual fund schemes?  Economic TimesExperts say investors should not be lured by the low-cost structure of passive funds alone.
Stop! Too many stocks, mutual funds are not good for you; Buying too many may not get you more  The Financial ExpressHandling the overall risk of investments is crucial, but not at the cost of not meeting your financial goals. Over-diversification can do this.
Sebi allows mutual funds in exchange traded commodity derivatives  Economic TimesNEW DELHI: The Securities and Exchange Board of India (Sebi) on Tuesday allowed mutual funds to participate in exchange-traded commodity derivatives ...
Budget 2019: what can mutual fund investors expect today?  Economic TimesSome fund managers say the government can offer exclusive tax deductions for the product if it wants to increase investor participation in mutual funds.
MF holdings of auto stocks at record low: Motilal Oswal study  BusinessLineMutual funds' holdings of auto sector stocks stood at a record low in April, finds a study by broking house Motilal Oswal Securities. The weightage of the auto ...
Flipkart co-founder Sachin Bansal may foray into mutual fund business  Economic TimesSachin Bansal, former co-Founder of Flipkart, is mulling a foray into the mutual fund space, according to a report by ETNow. The business news channel said ...
ITR filing: Income tax department makes disclosing LTCG from stocks, equity mutual funds simpler  LivemintThe Finance Bill 2018 reintroduced tax on LTCG made from listed shares and equity-oriented mutual fund.You only need to disclose the total LTCG from ...
Allocating to passive mutual funds in one's portfolio is increasingly making sense  Economic TimesPassive investments makes sense today as increasingly active ones are unable to beat it most times.
Investment in equity MFs drops 35% to ₹1.11 lakh crore in FY19  LivemintNEW DELHI: Investors pumped in more than ₹1.11 lakh crore in equity-oriented mutual fund (MF) schemes in 2018-19, a decline of 35 per cent compared to ...
Here are top 10 large, mid & small-cap stocks that MFs bought and sold in May  MoneycontrolAmong largecaps, Vodafone Idea, DLF, Bharti Airtel, HDFC Life Insurance and Piramal Enterprises witnessed highest buying during May 2019.
Which mutual funds will do well under new government?  Economic TimesIf you have any mutual fund queries, message on ET Mutual Funds on Facebook. We will get it answered by our panel of experts.
Best mutual funds to build Rs 1 crore for my son’s education  Economic TimesI want to build a corpus of Rs 1 crore for my son's education. He is now 3 years old. My investment horizon is 15-20 years. I have been investing in the following ...
How concentrated is your mutual fund portfolio?  LivemintA concentrated portfolio can backfire badly if the fund manager's strategy goes wrong.A portfolio with few stocks can fall sharply if share prices of most stocks in ...
Heres why investors should make index funds a part of their core portfolio  Business StandardWe often hear statements such as “Localisation is the key to success in India” or “What works in the rest of the world does not work in India”. These statements ...

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