Offbeat Buffett's buy-and-hold approach might be wrong for you

23:22  15 may  2018
23:22  15 may  2018 Source:   usatoday.com

Warren Buffett says bitcoin is 'probably rat poison squared'

  Warren Buffett says bitcoin is 'probably rat poison squared' Warren Buffett is not a fan of investing in bitcoin. The Oracle of Omaha reiterated his negative view on the cryptocurrency, according to CNBC's Becky Quick.Tweet LinkBitcoin is "probably rat poison squared," he said. Buffett is presiding at the Berkshire Hathaway 2018 annual shareholder meeting on Saturday.In January Buffett warned investors about the craze over bitcoin and other cryptocurrencies in interview with CNBC."In terms of cryptocurrencies, generally, I can say with almost certainty that they will come to a bad ending," the chairman and CEO of Berkshire Hathaway said then.

You may lack the intestinal fortitude to stick with Warren Buffett ' s buy - and - hold approach to investing during a severe stock market drop. That’s because your fears and hopes almost certainly will lead you in the wrong direction. More Money: Trans fats should be banned, World Health Organization says.

Buy and hold , also called position trading, is an investment strategy where an investor buys stocks and holds them for a long time, with the goal that stocks will gradually increase in value over a long period of time.

As he's done at virtually every other Berkshire Hathaway meeting over the last five decades, CEO Warren Buffett argued at the company's annual gathering this month that investors should buy and hold a stock index fund for the long term.

What has changed over the years, however, is investors’ receptivity to Buffett’s approach, which calls for holding onto stocks through thick and thin regardless of ups-and-downs in the market.

Warren Buffett’s three best investing tips — including 'margin of safety' — explained

  Warren Buffett’s three best investing tips — including 'margin of safety' — explained Warren Buffett believes investors should buy stocks within their "circle of competence" and at attractive values to succeed in the stock market.Buffett's track record is unparalleled. From 1965 to 2017, Berkshire Hathaway's rising market value generated a 20.9 percent annual return compared to S&P 500's 9.9 percent, resulting in a cumulative gain of 2,404,748 percent versus the market's 15,508 percent return.

Warren Buffett did not become a billionaire with simple buy - and - hold investing. That may be a bold statement to make, but once you understand his actual techniques of accumulating wealth, then you will be able to begin running your own investments in a similar way.

Warren Buffett says the best way to grow your wealth at incredible rates is to take advantage of compounding interest. In today' s video, I'll share his

Investors recently have been far more willing to believe him than they were at the depths of the financial crisis a decade ago, for example.

The reasons for this shift are a cautionary tale showing why you shouldn’t let your emotions rule your portfolio.

That’s because your fears and hopes will almost certainly lead you in the wrong direction.

More Money: What does Sears have left? Amazon's in; Whirlpool, Craftsman are out; and Kenmore may go

You are likely, for instance, to abandon buying and holding just when you should be more committed than ever. That time is at the bottom of a bear market — just as a new bull market is about to begin. But guess what? Since market bottoms are when the stock market is sitting on the biggest losses, that’s when buying and holding is the least popular.

Warren Buffett: 'I don’t have to do a thing' to own more of Apple

  Warren Buffett: 'I don’t have to do a thing' to own more of Apple Warren Buffett is fan of Apple's large stock buyback program.On Tuesday, the smartphone maker announced a new $100 billion stock buyback program.

May 5, 2016, 6:47 PM. Warren Buffett , chairman and CEO of Berkshire Hathaway. Buffett sure does buy and hold , but he also uses complex transactions to hedge his portfolio when markets move against And I think we should follow his footsteps and buy the euro as well. Don't get me wrong .

Buy and hold is a passive investment strategy for which an investor buys stocks and holds them for a long period regardless of Why Buffett ' s Buy - And - Hold Strategy Is Losing Its Appeal. How these two investing approaches work – and how to decide which best suits your precious nest egg.

On the other hand, you'll likely be tempted to embrace buying and holding at the worst possible time — when the market is lofty and headed for a fall. It’s at the end of long bull markets that buying and holding is most popular.

Just the opposite is true for a market timing approach, which calls for going in and out of stocks and other investments based on factors like Wall Street trading patterns and economic signals. The best time to become a market timer is at a top, as a new bear market is about to begin.

That’s not because market timers are more competent during bear markets, but because any time they move out of stocks and into cash during declines, they'll gain ground on buying and holding — even if those times out of the market are picked by a market timer who has no ability.

In the 2007-2009 bear market, for example, the average stock shed nearly 60% of its value. Other than Mr. Buffett, true believers in buying and holding were few and far between at the March 2009 bottom. Indeed, a widely-expressed view among the investment newsletter editors I monitor was that “buy and hold” was dead.

Buffett bashes bitcoin as nonproductive, thriving on mystique

  Buffett bashes bitcoin as nonproductive, thriving on mystique Billionaire investor Warren Buffett on Monday said buyers of bitcoin, which he has characterized as "rat poison squared," thrive on the hope they'll find other people who will pay more for it. Likening bitcoin demand to the tulip mania in 17th-century Holland, Buffett, the chairman and chief executive of Berkshire Hathaway, said the mystique behind the cryptocurrency has driven a surge in its price."It does create a rising price, creates more buyers ... If you don't understand it, you get much more excited," Buffett said on CNBC television. "People like to speculate, they like to gamble.

( Buy and hold ). Why do you think more people don't follow your advice? What can go wrong at Berkshire? What is Berkshire' s cost of capital? Given you [ Buffett and Munger] are Berkshire’ s sustainable competitive advantage, would you invest in Berkshire now?

Berkshire Hathaway has taken a different approach and instead focused on investing in the right companies. 10) Buy It Thinking You Will Hold It Forever. “Our favorite holding period is forever.” Love these Warren Buffett quotes? You may also enjoy these articles

Today, by contrast, with the Standard & Poor’s 500 index more than four times higher than where it stood at that bottom, we are at the opposite extreme. Most of the buy-and-hold skeptics have become converts to the approach. Now it’s market timing whose usefulness is being questioned.

Note carefully that investors’ shifting opinions towards buying and holding, and market timing have nothing to do with their statistical merits. As Mr. Buffett often notes, hardly any market timers are able to do better than an index fund over the very long term. He’s right, of course.

As you ponder whether to follow his advice, however, the question before you is not statistical as much as it is psychological. Are you willing to remain a buy-and-hold investor through the next bear market?

There’s no shame in admitting that you don’t have the stomach for those big losses. What you don’t want to do is to discover, at the bottom of the next bear market, that you don’t have what it takes.

Far better to sell some stocks and start building up cash in your portfolio now, with the market at relatively high levels. Even if you don’t catch the exact top — and it’s unlikely that you will — you still will be far better off than throwing in the towel at the bottom of the next bear.

Only if you have the rare intestinal fortitude required to truly stick with an index fund through a severe bear market should you now be taking Buffett’s advice to buy and hold.

Mark Hulbert, founder of the Hulbert Financial Digest, has been tracking investment advisers' performances for four decades. For more information, email him at [email protected] or go to www.hulbertratings.com.

Buffett says interest rates are key in determining stock values .
Warren Buffett believes interest rates levels are a critical component in figuring out if a stock is cheap or expensive.In a 2017 interview video clip found using CNBC's Warren Buffett Archive, the investor explained why rates matter so much for stock investors.

—   Share news in the SOC. Networks

Topical videos:

This is interesting!