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; al@mutualfundstrategy.com

---

Mutual Funds: The Modern Den of Thieves!

Mutual funds were created with the idea that one person... Read More

Kick The Tires

Before you buy another car you walk around the lot,... Read More

Struggling Stocks, Booming Commodities

04/28/2005NASDAQ dropped -12.5% year to date in 2005. S&P500 index... Read More

Traders, Defend Against the Dreaded Death Spiral.

It has often been said that there is only two... Read More

Online Investing & Stock & Share Trading: 4 Reasons Why Most Online Investors & Traders Go Broke

Are you attracted to the idea of being in control... Read More

Analyzing Growth Stocks: An Important Focus For Any Investor

Analyzing growth stocks is an important focus for any investor.... Read More

Top 25 Growth Funds

On Monday, November 25, 2000 Investor's Business Daily listed on... Read More

A Stock Market Investment Plan that Never Lets You Down

The bulls and bears of the stock market are both... Read More

Exchange Traded Funds Primer

Exchange Traded Funds (ETFs) are a group of passive index... Read More

Whitewater Stock Market

Ever done any whitewater rafting or canoeing? Long periods of... Read More

Living Trust Investing: Income Considerations when the Grantor Dies

A common problem I often see when working with living... Read More

Jack and Jill

Jack and Jill went up the hill to fetch a... Read More

Inverted Interest Rates

Inverted interest rates? What's that? Who cares? Even if you... Read More

Stock Investment Advice

Stock investment advice is easy to find. Do you get... Read More

Its A Bull, Its A Bear, Its Suptertrader!

The higher the market goes the more confusing are the... Read More

Chart Reading

As an investor you will want to check out any... Read More

When Should I Sell?

People are always asking me when should I sell my... Read More

Different Types of Mutual Funds

This is a guide to the different types of mutual... Read More

What the SEC Really Thinks About Mutual Funds!

Let's go into the details of why non-indexed mutual funds... Read More

Peer Groups

Whenever I see mutual fund comparisons in the trade publications... Read More

Where Is The Beef?

Where is the beef? Or maybe it should be where... Read More

Stock Market Investments

If there is one term over-used when talking about making... Read More

8 Penny Stocks to Avoid

There are many good penny stock investments available, which could... Read More

401K-itis

Are you one of those many people who dread reading... Read More

Pathways

During our travel down life's path we come to many... Read More

What To Buy?

Now that you have some money burning a hole in... Read More

10 Tips For Creating Wealth From the Stock Market

1. Do not spread your money too thin.My friend has... Read More

Selection Vs Direction

As I have said many times before in this column... Read More

Trade Stocks for Real

I read a comment by a forum member on another... Read More

The Problem With Hedge Funds

Are hedge funds a suitable investment for you? Hedge funds... Read More

Wal-Mart: Discount Store, Discounted Stock?

As GuruFocus updates the stock buys and sells of gurus,... Read More

My Stock - Right or Wrong

We all know the expression, "My country, right or wrong",... Read More

Investment Lawyers and Trash Stocks

The trash business in its efforts to cook their books... Read More