“Our favorite holding period is forever.” Warren Buffett

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Buy and Hold Isn’t Easy
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Is there really such a thing as buy and hold? Warren Buffett sees it as a goal in the quote above but in fact many of his holdings were not forever. Investors may buy and hold the S&P 500 or a small cap value fund forever but inside both securities there are lots of changes going on. In a U.S. 4 Fund Portfolio an investor may own the 4 equity asset classes for the next 50 years but there will likely be rebalancing going on, as well as choosing different funds to access the asset classes most efficiently.

I walk Squish, our chihuahua, many times a day starting at 6 a.m. While I don’t read the Wall Street Journal on a regular basis, many in our building do and I do take a quick peak at the headlines as I head out for the first watering. On September 3 one of the headlines read, “Investors’ Attitude On Stocks Gets Ultra Bullish.” I immediately think, “Sounds like a market top to me!”

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The copy reads, “U.S. investors have rarely been this giddy about the stock market. They are piling into stocks as major indexes reach new highs and placing bets that the rally that has driven the S&P 500 up 18% this year has more room to run.”

In fact, the article notes, U.S. households have more equites in their portfolios (42% of financial assets) since 1952.

Do these investors know that the market will likely go through a 20% to 50% decline in the coming years and many will find themselves ditching their long term hopes of early retirement and "easy money.”

Recency bias is a powerful emotion. It encourages investors to buy what’s been going up recently and selling what’s been going down. There is no evidence that following those recent trends is a path to long term success.

There is a lot of evidence that dollar cost averaging into asset classes that have a long history of success pays a handsome return. I hope those who are raising their equity exposure will stay the course when those investments go through their normal declines.

By the way, I am happy equity holdings have reached record 70 year levels. I believe most investors need more equities in their portfolios but worry most investors are not prepared for the rest of the cycle.

I hope our dozens of studies will be instrumental in helping you stay the course in good times and bad.

Latest Podcast- DCA vs. Lump Sum, Not Trusting SCV, Maximizing Roth, Moving From Ultimate B/H to Smaller Portfolio and More

Paul starts the podcast talking about the upcoming Boglehead Conference (Sept.27-29) in Minneapolis. The following link lists the speakers and topics. ⁠https://boglecenter.net/2024conference/⁠

Q1: Should I invest $300,000 inheritance all at once or dollar cost average? 02:23

Q2: If SCV is such a great asset class why do the companies all have such low P/E ratios? 8:06

Q3: Given that our Roth IRAs have unlimited investment options how should we approach investing in our Roth accounts to best complement the life cycle funds in our 401k? 21:54

Q4: Should we invest our IRA contributions the first of the year or dollar cost average over the year? 24:56

Q5: I’m 70 and am considering a combination of the 2040 target date fund and small cap value. How much should be in each? 26:34

Q6: Been in Ultimate Buy and Hold since 2013. I’m thinking about simplifying by using 2 or 4 fund portfolios. What are the pros and cons of change? ⁠Recommended reviewing.⁠ 29:37

Q7: Can I still rollover regular IRAs into Roth now that I am retired? ⁠Recommended reading.⁠ 35:50

Q8: As a risk reducer to equities can I use T-Bills and money market funds rather than any kind of bonds. 37:35

Testimonial

Thank you Paul, thank you Chris for the generosity of sharing this content. It is priceless for those of us who study it, but most importantly use it to take action to invest and bless others with the fruit of the investments. L.G.

DCA vs. Lump Sum, Not Trusting SCV, Maximizing Roth, Moving From Ultimate B/H to Smaller Portfolio and More

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In This EditionBuy and Hold Isn’t EasyLatest PodcastTestimonial

In This Edition
Buy and Hold Isn’t Easy
Latest Podcast
Testimonial