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Is "buy and hold" the right strategy in this tumultuous economy?


I'm not sure if economic conditions are all that tumultuous, but anxiety about them is certainly making the financial markets unpleasant places to be. Buying and holding is especially helpful amid such a backdrop because it takes much of the emotion out of investing. That's a good thing because investors have a habit of experiencing emotions at the wrong times, panicking at market bottoms and getting greedy at tops. When investors act on those emotions en masse, in fact, it helps to create significant tops and bottoms.
One interesting aspect of investor psychology is that faith in buying and holding tends to occur near the ends of bull markets - after the practice has worked for a while - and it's hard to find Wall Street pundits who will discredit it. After a serious decline, by contrast, the same pundits are inclined to extol the virtues of market timing, and support for buying and holding can evaporate. When that happens, it can be a sign that the decline is about to reverse.
-Conrad de Aenlle