I consider John Bogle to be the father of index investing. And for those who follow this blog, you know that I am a fan of passive investing utilizing index funds.
As founder of the Vanguard Group, Mr. Bogle has built a mammoth investment company over the years.
So when Mr. Bogle speaks, his comments are worth listening to. (more…)
SmartMoney.com recently issued a short video entitled, “Why ‘Buy & Hold’ Strategy No Longer Works”.
I am a proponent of the “buy and hold, but rebalance” approach, but thought it useful to provide a differing view. Not one I agree with, but it is always good to show all sides of a topic and let readers reach their own conclusions.
The video and my commentary are below. (more…)
In How to Rebalance an Investment Portfolio, I stated that it is generally preferable to reallocate future acquisitions rather than divesting existing assets to get back to your target asset allocation.
A big reason for this is to defer capital gains taxes payable from selling outperforming assets. The longer you keep your wealth in your possession, the better your compound returns will be. This is a problem when triggering taxes on asset sales. (more…)
Some interesting bits of information in this article from The Wall Street Journal.
First, it shows that individuals with over USD 1 million in bankable assets are increasing their use of professional asset managers. According to the article, (more…)
A long-term buy and hold strategy can work with individual, non-diversified assets. For example, shares of Cisco or Swiss Re. Or General Electric Capital bonds. Or the Japanese Yen.
But I would not recommend it.
Here is why. (more…)
A potentially legitimate concern about buy and hold investing is that it underperforms active management during fluctuating and bear markets.
Today we will review how to protect your wealth during periods of market volatility when using buy and hold.
A few points come from my general long-term investment philosophy. One that attempts to build such safeguards automatically into one’s portfolio.
A few other thoughts will involve tweaks to the traditional buy and hold methodology. Tweaks that hopefully will improve on its performance. (more…)
There are a variety of ways to trade investments.
On the one extreme you have the rigid buy and hold investors.
At the other end of the spectrum are the day traders.
And at various points in between are the bulk of investors.
We will quickly review each today. (more…)
A third reason I think Dollar Cost Averaging (DCA) is a useful tool is that it is great for building a diversified portfolio over time.
That is not to say that one cannot build a diversified portfolio through lump sum investing. However, I believe that DCA can make the process easier and more consistent for investors, especially those with limited resources. (more…)
My investment philosophy is quite simple.
Most investors should utilize a passive investment strategy, with an emphasis on cost minimization and optimal portfolio diversification.
We have covered my reasoning for this in many posts leading up to today.
In short: (more…)
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