ALL ORDS went nowhere for 7 YEARS!

[pixel]

I'd say the common definition of buy and hold amongst the people who mostly do this, is the set and forget approach. The[n] they are upset when they lose money.

Well put, Julia;

Most often, the distinction is made between

• "investing" - implying virtue, wisdom, supporting a worthy cause - vs
• "trading" - taken to be the immoral chase of the quick buck, which is only eclipsed by
• "shorting" - that's wrecking all the good intentions of investors

If anyone's ultimate goal does not include asset security and, as far as possible, asset augmentation, I'd like to hear (a) what they intend to achieve instead and (b) how much money they intend to give away.

I reckon the wiki qualification "within an expected period of time" is hitting the mark squarely. Sometimes, I "invest" for only a few minutes, but if a stock remains in a Bull Trend, I keep "invested" in the trend till the bend at the end.
"Forgetting" is laziness, not a virtue. Failing to take corrective action and allowing one's assets to decline unnecessarily is not wise, it's simply stupid.

 

[Wysiwyg]

Sometimes, I "invest" for only a few minutes, but if a stock remains in a Bull Trend, I keep "invested" in the trend till the bend at the end.
"Forgetting" is laziness, not a virtue. Failing to take corrective action and allowing one's assets to decline unnecessarily is not wise, it's simply stupid.

Guilty your Honor.



The following forum member thanks Pixel for this post -

Wysiwyg.

 

[Starcraftmazter]

So I take it all you blokes are in cash are you? If you haven't any cash then what about your super, did you put it into cash? And if you didn't, why not? I mean with such long term negative views that would be the way to go wouldn't it? Just wondering...

Only if you're a long-term investor.

The average person who started investing in the 1960s (in US) did not beat inflation today. And that's over 50 years...

That's a good chart, thanks.

 

[young-gun]

I don't especially see why buy and hold should relate to a period of 2, 3 or 4 years, or why the term 'investing' makes any particular difference. Not at all having a go at you here, young-gun, just think the terminology is ill defined and therefore the discussion doesn't make as much sense as it could.

no problem, was just how i view buy and hold. i guess the issue is everyone has their own definition.

I'd say the common definition of buy and hold amongst the people who mostly do this, is the set and forget approach. They they are upset when they lose money.

if buy and hold is largely viewed as buy and forget then i dont believe this to be a form of investing, i see it as a form of stupidity. to go into anything at all in life without having a strong understanding of what your doing, and a plan in place, is just being wreckless, especially in regards to 'investing'(and i use the term loosely) your hard earned $$$.

pixel, for some it can be put down to stupidity, but others simply human nature. alot of people trade a greed based system. that is, they will happily hold a stock that has fallen 25% as they believe(or wish) that it will return to where it was and they're profits will return and they can then sell and look like a trading extraordinaire. no doubt these are the same people are currently holding telstra with the belief that it will return to $9 any day now.

 

[banco]

Had a change of heart over a couple of days, huh, banco?

.

No I was being sarcastic. "Stocks for the long term, take the long view etc." is the kind of lazy drivel you see in the financial pages every time the market takes a dip.

 

[robusta]

No I was being sarcastic. "Stocks for the long term, take the long view etc." is the kind of lazy drivel you see in the financial pages every time the market takes a dip.

Any strangely some seem to profit from this strategy - take a look at the performance of ARG over the last 20 years, they have returned 9.4% pa compared to the all ord acc index 8.9% pa - this includes the last 7 years!

 

[Bill M]

Any strangely some seem to profit from this strategy - take a look at the performance of ARG over the last 20 years, they have returned 9.4% pa compared to the all ord acc index 8.9% pa - this includes the last 7 years!

Thanks for that, this is what long term investing is all about. From the website:

"Argo has paid a dividend every year since it was formed in 1946."

At it's current price of $5.16 your gross dividend is 7.2%, not bad for doing nothing.

 

[Klogg]

Doesn't "Buy and Hold" comprise of buying a company (with a longer term view), watching it vigilantly once you own it and selling once it's getting off-track or not meeting your investment criteria...?

From what I'm understanding, people have the impression it's "Buy and Forget"... Very disturbing, and an easy way to lose money!

 

[DocK]

Doesn't "Buy and Hold" comprise of buying a company (with a longer term view), watching it vigilantly once you own it and selling once it's getting off-track or not meeting your investment criteria...?

From what I'm understanding, people have the impression it's "Buy and Forget"... Very disturbing, and an easy way to lose money!

"Buy and Hold" has become such a generic term it often means different things to different people - from "Buy and Forget" to "Actively Invest". Just as people's definitions of timeframes vary considerably - a daytrader who trades off a 5 min chart would no doubt consider my definition of medium-term to be quite longterm.

 

[pixel]

Doesn't "Buy and Hold" comprise of buying a company (with a longer term view), watching it vigilantly once you own it and selling once it's getting off-track or not meeting your investment criteria...?

From what I'm understanding, people have the impression it's "Buy and Forget"... Very disturbing, and an easy way to lose money!

There are some stocks being "discussed" in various circles, for whom "Hold" has the meaning "Stick with them for better or worse". For example, when CVN came back down from 80c, I suggested it's time to take profit. Only to be flamed as a downramping bluddy daytrader, who had no concern for the wellbeing of those early entrants who saw value and bought big at 6c. SLA is another example, and the list could go on...

Open-eyed people - whether they call themselves investors or traders or anything in between - will consider that kind of "Hold" as dumb as the notion of averaging down.

Holding through an uptrend over an individually-selected reasonable time frame is a completely different animal. Just be sure you don't fall in love with a stock and miss the "bend at the end of the trend." Or, worse, view a falling trend through those inversion goggles that show support where none exists.

 

[Macros]

I don't believe in buy and hold, as it is usually a symptom of either a lack of investment strategy or just pure lack of understanding. My philosophy is to buy under-priced companies with growing value in favourable macro conditions. I look to achieve very high rates of return and detest losses.

As such, it is important to know where the overall market is headed as that will usually have a substantial influence on individual stock selections and the types of companies that will do well in a particular environment.

I now have two indicators for the overall market. Firstly, one which determines fair value based on forward earnings estimates - but has the flaw of those estimates changing on a frequent basis. Secondly, one which determines fair value based on economic indicators and completely excludes past or future company earnings.

Given the fact that the market has gone nowhere for seven years, you may find this indicator interesting (as least I did when I charted it for the first time the other day):



At least based on this indicator, fair value dropped far below market price in early 2007 and has only now exceeded it - which is interesting. I find it interesting that it suggested that the market got ahead of itself in the rebound of 2009 and also that we have the potential to enter in to a bull market (yeah I know about the global problems) - at least on nominal terms. I haven't been able to track this prior to 2003, however it has been very effective during the time period. It is an indicator that I will be watching closely to help inform my investment timing and allocation decisions.

 

[qldfrog]

Interesting, where did you get your historic fair value from?

 

[Macros]

Interesting, where did you get your historic fair value from?

It is a non-equally weighted modified index of important US based economic indicators that include: capacity utilisation, business inventories, PMI manufacturing index, new orders, M2 money supply, treasury rate, corporate bond yields and financial stress index.

I created it to provide an alternative to using consensus EPS forecasts, which are constantly changing and therefore useful over the shorter term. They are likely more of a lagging indicator. Whereas the economic indicator does not change and is not subject to human qualification or expectation. Instead of using past EPS and forecast EPS, it uses economic indicators to determine fair value.

 

[mildew]

Re: ALL ORDS went no where for 7 YEARS!!

$500 for anyone who bought the "ALL ORDS" in Jan 2005.

and paid $500

 

[explod]

Macros

I don't believe in buy and hold, as it is usually a symptom of either a lack of investment strategy or just pure lack of understanding. My philosophy is to buy under-priced companies with growing value in favourable macro conditions. I look to achieve very high rates of return and detest losses.

As such, it is important to know where the overall market is headed as that will usually have a substantial influence on individual stock selections and the types of companies that will do well in a particular environment.

I do not think you can approach things better than this.

And it really is just trend following, find the best stocks in the best sectors that have the best sentiment and fundamentals. And as the techo's know it is the sentiment that drives t/a and in effect that state is reached because all of the boxes in the first para have been checked and ticked by the market.

But I can assure you newer ones to the market that to act cool and know takes many years at it. And as one who has gone belly up I wished I had had the wisdom in earlier times. And perhaps the going broke is part of the preparation to real success.

A good post there Macros.

 

[mildew]

Just out of curiosity does anyone want to take a punt on where the ALL ORDS will finish on the last day of trading in 2012?

I feel tired and defeated after 5 years of watching my super (since I retired) go down the gurgler. So I'll say 4,100.

 

[Macros]

I do not think you can approach things better than this.

And it really is just trend following, find the best stocks in the best sectors that have the best sentiment and fundamentals. And as the techo's know it is the sentiment that drives t/a and in effect that state is reached because all of the boxes in the first para have been checked and ticked by the market.

But I can assure you newer ones to the market that to act cool and know takes many years at it. And as one who has gone belly up I wished I had had the wisdom in earlier times. And perhaps the going broke is part of the preparation to real success.

A good post there Macros.

Thank you Explod.

I think the worst type of mentality is to 'go down with the ship', because even if you think you have it right, sometimes the market may know more and one must frequently question themselves and minimise risk.

Sorry to hear that you had such a bad experience. However I'm sure it is a valuable learning tool and, in my view, I think that the route to success can be found by making a few very good decisions at the right times. Some people go through their life and never learn. I think the irony is that most people are so focused on making gains, when the key is to focus on the process. Many entrepreneurs that are very successful have gone bust once or more, so a failure is not the end of the world - and hopefully you can become richer for the experience.

 

[Macros]

I feel tired and defeated after 5 years of watching my super (since I retired) go down the gurgler. So I'll say 4,100.

Sorry to hear that Mildew.

I think in your case, if you are not scared away, you may want to focus on quality stable companies that will be around for a long time and pay strong and growing dividends. If there ever was a time where these companies can be found, now is it.

 

[mildew]

Why when our economy has been so strong albeit on the back of the miners only?

 

[Macros]

Why when our economy has been so strong albeit on the back of the miners only?

The economy, or the perception of it, does not equal the market. The market is impacted by the economic variables, but under my understanding of fair value, there are good times to invest and bad times.

We live in a globalised and interlinked world. Australian company earnings per share are virtually the same as the US Dow companies, just with a greater rate of change.