Buy & Hold Investors

Perception vs. Reality

Buy and Hold investing is considered by many to be the holy grail of wealth management.  Its popularity has become a mantra for passive money managers who prefer to “set it and forget it,” relying on diversification and allocation to protect and grow their money.  And those who question this beloved strategy are often derided and dismissed.

Fortunately, more modern minds have proven there is a smarter, more refined path to earning higher returns than buy and hold – with nearly the same amount of effort.  And SmartStops has captured that intelligence in its data-driven investing tools to help avoid the big “drops,” to more effectively protect your money and thereby grow it faster.

First, ask yourself – Is the stock market the same as it was 20 years ago?  50 years ago?  No, it’s not.  Geopolitical turmoil and global economic storms have become the norm.  Information and disinformation fly across the internet 24 hours a day.  Equilibrium and orderly markets are myths. Investors need to be far more flexible than they have in the past and embrace asset protection in a modern, sophisticated way that can counter these more and growing volatile forces.

Buy & Hold investors spend large periods of time recovering losses and not compounding wealth.” 

The old approach of Buy and Hold encourages investors to just ride the ups and downs in the market.  “Don’t worry,”  Wall Street big firms and so-called experts will tell you, “it will eventually recover.”  Buy & hold investors are STILL being told to sit back and take the pain, even if that means their portfolios are underwater for years!

But the only thing this approach guarantees is that investors will spend large periods of time recovering losses and not compounding wealth.

From Our Blog

FALSE

Diversified portfolios don’t protect against increases in volatility. When volatility spikes, most asset classes tend to decline in unison, as correlations rise. The diversification investors thought they had quickly disappears. The recent financial crisis clearly showed that just relying on diversifying does not offer sufficient protection during crisis periods.

FALSE

First, it is important to understand that draw downs are occurring much more frequently then one may realize. Second, as your portfolio drops or you lose your unrealized gains, the fact is that it takes that much longer to recover. This is known as the asymmetry of losses.

FALSE

Market growth is not constant as this chart shows you. And we all know that no one can predict the future.

When the USA went off the gold standard in the 1970’s, this has fostered an environment where money can just be printed and markets can be boosted artificially by many non-transparent actors including central banks around the world.