Buy and Hold = Buy and Lose?

There was a time between 1980 and 1998 when you could buy good stocks and know that you would make money simply by holding them. The old adage that says, for every ten year period stock are always higher at the end than at the beginning, held true at the time. That statement was true for a while-and may be again-but not lately.

The chart below, courtesy of www.newinvestornews.com, illuminates the issue. Here's how to interpret it:

• $30,000 represents the amount one would have invested in an S&P 500 Index fund (buying the market) over ten years, so that is the "break even" level.
• $30,000 invested between 1990 and 2000 would grow to a bit over $80,000 as shown to the left of the graph.
• The blue vertical bars show that until 1998 the money would have grown beyond the $30,000 invested, though not by much in most ten year spans.
• The red bars to the right of the graph show that since 1999 $30,000 invested became worth less ten years later. Investors were losing money.

Investors today need to be more involved and more agile than needed to be in the "buy and ignore" days gone by. If you aren't using a market timing approach with your investments you are in danger of falling further behind. Visit our website, http://www.investmenttimingsoftware.com to learn about one very effective market timing tool and strategy, and please contact me with any questions you might have.

Arley Loeffler, CEO
Investment Timing Software, LLC
arley@itspage.com