Re-Thinking Buy and Hold

I had been a classical “Buy and Hold” investor for years.

Part of it had to do with what used to be the exorbitant costs of trading back in the days when either you listened to what E.F. Hutton had to say or you took the advice of one of his competitors.

You surely couldn’t do it on your own.

Needing to achieve a 10% price rise just to cover your round-trip trading costs made frequent trading basically impossible for most, especially early in their careers.

But I did listen to E.F. Hutton and I happened to have been one of the lucky ones who took a cold call from a young stockbroker, as they were called back then, who turned out to be a wonderful ally in support of my financial interests and those of my parents.

He was “Buy and Hold” all the way, even when it was an entirely commission based relationship. He traded more often when we went to a managed account and trading costs weren’t directly my costs.

Then he died.

I never micro-managed my accounts with him, but I always kept an eye on them from day to day and used to wonder why we didn’t trade more often, as noting the frequent ups and downs and all of the lost opportunities.

It was sort of like holding that perfect banana.

How long do you hold it before the rotting process kicks in?

Hindsight is great.

Continue reading on Seeking Alpha