Tuesday, 24 October 2017

Buy and Hold - Who sold you that idea?

Nope. Not going to tell you what to believe.

If you game for a simple exercise to test your conviction on Buy and Hold, do read on...

Have you bought an Investment Linked Policy before?

Your conviction on the suitability of the product for you must be strong, if not you would not have bought it, wouldn't you?

Fast forward to today when you are more financially literate. 


Almost all the hobbyist bloggers honest enough to admit they were dumb enough to buy ILPs have cancelled their policies. Even at a loss. 

Yes, ILPs are that toxic...


You have not bought ILPs before? Cannot relate? 

I try again.

Think of something you were so damn sure before. Anything. 

Then you had a big epiphany that you were taken for a fool all along... That epiphany "maciam" like believing the Sun revolves round the Earth and finding out it isn't so!

Now I ask you.

Your belief and conviction on Buy and Hold, was it based on your own track record?

Or was it based on your own research and self discovery?

Not likely right?

Can you remember who sold that idea to you?

Go back and ask that person whether he willing to sign a written guarantee to make you whole again if Buy and Hold results in a financial loss for you after 30 years?

He wouldn't dare, would he? Unless he is 70 years old. Wink.

Ask yourself why you so confident about Buy and Hold will make money in the long run when the person who sold you that idea isn't so convinced himself?

P.S.  Special thanks to Keith of Investment Moats for allowing me to "steal with pride" the above picture from his post at BIGS World where he is also the admin.


  1. Hmm... Smol.

    Even if someone put hand on heart and says I buy and hold, we need to understand his context.

    I know from valuebuddies someone who never sell, he hold several “cert” because the company go “bust”, but if I remember correctly he holds about 500 plus counters.

    Buy and hold of course correct la, if u are letting your winners run. But Mr market won’t let it be so easy...
    but ask me. I sold 100-140% for 30-40% profits. I tell u nothing wrong with but and hold if it doesn’y Trigger your trailing stop. But as I say, mr market don’t make it so easy.

    After thinking aloud, I realise everyone need everything... they need buy sell and hold.

    All 3 are important. Hold is important too.

    But the reason behind that buy or hold must be clear, until proven wrong. I decided that I should stop looking at percentage gain or loss but look at it in totality with the qualitative story with the qualitative reasoning taking a more important part to the buy sell or hold decision.

    It makes things simpler for me.

    I just sold my last tranche of Lee metals today. No struggle like the past. Just ask a few questions and I go ok. Time to take action

    1. Sillyinvestor,

      You are now speaking more and more from personal experience, self discovery, and personal research ;)

      I think pretty soon, "many" will visit your blog and ask you what stocks to buy, at this price can buy or not?


    2. Hahaha SMoL,

      Almost missed your inverted comas...

  2. There are TIME in the Market to put into practice of Buy & Hold and laughing to the bank. When is that time? But, don't ask around who sold you this idea!

    1. CW,

      A good test to see whether the person spouting Buy and Hold is a parrot or the real McCoy is to ask WHEN do we sell?

      Or is it really "forever" and throw this problem to our children to figure out?


  3. CW, indeed, that is one of the consideration.

    There are 2 answers, anytime and durian session.

    But are correct, if u get your “why” right

  4. The wisdom of buy and hold is not that stocks always outperform. They don't.
    And it's not that you'll always get rich over time. You won't.
    It's that stocks tend to be the best-performing asset over long periods of time (assuming the unpredictable future is not so much different from the past).
    And trying to shorten that time by jumping in and out of other assets is the express lane to misery and regret.

    The best solution is balance and true diversification. Buy and hold doesn't mean you only own stocks!
    It means you hold an appropriate balance of diversified assets that fits your goals. Everyone should own enough in other asset classes to keep volatility from scaring them out of stocks, and enough stocks to keep lower returns from other asset classes from scaring us out of retirement. That's true buy and hold.

    And of course, profit is only made once we sell and never by buying and holding and holding and ...

    1. Andy,

      I find myself nodding with what you say... Especially on balance and true diversification ;)

      Spoken like a land owner.

      Hey! You are one!

  5. B&H theory -- broadly diversified portfolio across different asset classes, countries, sectors etc, and re-balanced on periodic or asset allocation re-alignment basis. Injections of new money to be according to master asset allocation.

    B&H practice -- buy the best potential stocks according to guru-level analysis, watch the price decline, buy more & average down, after 12 months of decline & revised earnings guidance ... log off online broker & throw away CDP/broker statements in disgust.

    1. Spur,


      No wonder supposedly financially literate people are spending so much time and energy on CPF...

      Evidently not everyone is confident of their own "convictions" afterall.


  6. Hi SMOL,

    To be able to buy and hold presupposes buying and holding a suitable spouse.

    If not "team player", how to even talk about whether wealth could compound or not? Kekeke

    1. Unintelligent Nerd,

      Another reason why Trading is more suitable for me!

      I'm not a one woman man...

  7. Hi SMOL,

    Buy and hold... buy what and hold what?
    Buy OCBC after GFC at $4 and holding.. tasty
    Buy Blumont in 2003 at $2 and holding.. hmm..what?

    1. sleepydevil,

      Lucky I'm guy.

      If I'm a woman at 50, seeing you at 19 standing next to me, I'll scratch your face out!

      What I would give to be 19 all over again!!!

      You've grasped the essense of Buy and Hold ;)

      Stay forever young, and remember:

      Youth, your strength is you don't know what cannot be done!



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