"Buy and hold" strategy. Is this strategy dead?
In a recent CNBC interview, Warren Buffett was asked by a sender of email regarding buy and hold strategy. His reply was a short one. This strategy works for certain selected stocks. He added other strategies can be profitable for some too.
My comments:
Stock selection is of course very important. This can be achieved through applying the right investing knowledge, diligent study of the company and hard work.
Over the short-term, you will probably be right (positive returns) 50% of the time. However, over the long-term, you are more likely to be right most of the time.
Be sure to ride the winners, add more to the winners for big gains. If one has made a mistake, cut the losers early to keep the losses small.
In my experience, long term buy and hold investing has been rewarding. It has been safe (safety of principal) and has also generated good return for the given reward/risk ratio.
Always buy the stock at a bargain (margin of safety). This minimises the downside risk and provides potentially a higher return.
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