Is Buy and Hold Really Dead?

I don't think so.

You probably have heard some of this buy and hold stuff being good in the 1980's & 1990's but it can't work anymore, the bubble taught us that, right?

Buy and hold is not dead but it has changed, and that is ok. Any stock you buy for a properly diversified should have a purpose. Maybe the stock is a good proxy for its sector, or has a high dividend, or a high beta, or is a good way to access the stock market of a foreign country. For example one stock I own for clients is Bank Of America, it serves many purposes; mega cap, 4% dividend, good proxy for financials etc. I bought it with the intention of holding it forever. Last spring when I got defensive in the portfolio B of A was not a name I sold for several reasons. Although there is no visibility as to why I would ever sell it I don't really expect to hold it for ever. I imagine that at some point it will no longer serve one of the purposes for which I hold it. I employ this logic for almost every stock I buy.

One exception was last year I bought the semiconductor Ishares thinking I would only own it for a few months. Typically semiconductors, along with copper stocks, is one of the first groups to turn up in anticipation of an economic recovery. In the summer and fall of 2003 this played true to form. Semi's outperformed the broad tech sector for several months. Sometimes history repeats itself.

When I get it wrong I take that as a good reason to sell too. I thought Colgate would be a good proxy for consumer stocks and got that wrong, it lagged the group the entire year that I owned it. I gave it a fair chance but it was not serving its purpose so I sold it.

Investing is a dynamic process. When things change it is important to be out in front of those changes and base decisions of any new information you get. Always look forward. I know plenty of people that, whether they realize it or not, care more about where a stock has been than where it is going. The market tells you what you need to know if you listen. That is easier said than done, but once you take that to heart your returns are bound to improve.

Well I have to get ready for the Red Sox game, pass the Pepto.

There are times I get it wrong and so I sell.