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So far, so good in 2009
Friday, March 20, 2009
It strikes me as a bit funny (and misinformed) these days to hear people say that "buy and hold" is now dead - that, somehow, everyone has to be a nimble trader and occasionally take short positions, rarely straying from the familiar broad equity markets.
Obviously, these people are not "buying and holding" the right assets because, so far this year, you could have done quite well in a long-only mostly non-stock portfolio as shown above.
For some time now, the model portfolio at the companion website Iacono Research has had a heavy weighting of gold and silver bullion along with a large cash position and some mining stocks, however, that is now changing. Other natural resource categories are in the process of being rebuilt after a raft of sales last year (not everything was held during the 2008 melt-down, but most of it was) and it's shaping up to be an exciting year.
So far, so good in 2009.
To learn more about investing in natural resources using commonly traded ETFs, stocks, and mutual funds, see this description at Iacono Research. Or, sign up for a free trial.
10 comments:
I probably own much of what you do in your model portfolio if your blog is any hint. However, it seems disingenious to me for you to say that the 2009 performance (10 weeks) has anything to do with any "buy and hold" strategy. You can't cherry pick 10 weeks and say you're up. You were down 27% last year.
So while you're correct in saying one doesn't have to trade and short stocks, just pick the right things to own, showing your portfolio's performance as "proof" doesn't cut it.
But then I remember, like everyone in the FIRE economy, you're a salesman first, teacher second.
You must be new around here. I'd recommend you do a little homework before you cast aspersions my way and I'm not sure why I'm even bothering to type in response to someone who can only muster "Anonymous".
If you saw the -27% in 2008, you probably also saw the +21.9%, +25.4%, and +23.9 percent for the three prior years, yet they were somehow irrelevant to whatever point you were trying to make?
Now I understand why you didn't leave a name. For more on historical performance (all documented in excruciating detail), see here and here.
Don't know how I could have forgotten this part, but it's stuck in my craw - "But then I remember, like everyone in the FIRE economy, you're a salesman first, teacher second."
You must have me confused with someone who works in the finance industry (certainly not insurance or real estate). I'm just a guy who retired very early leaving plenty of time to make fun of people on his blog and to write an investment newsletter about how he manages his own money.
FIRE? Puhlease. Salesman? You've got to be kidding.
And here's a revelation for you - as I've learned over the past few years, the way you become successful in dispensing investment advice is through sales and marketing, not by providing good investment advice. There are countless examples of this. Since I hate sales and marketing, I hold out little hope of building an empire - fortunately, that was never my aim.
Buy and Hope usually refers to people who hold major indexes or otherwise do not pick stocks meticulously and re-balance it several times a year.
Yes, in hindsight - buy and hold always wins, IF you happen to pick the right bottom - which nobody can do when it happens. AND, if your horizon is long enough.
For people who don't have über-stock-picking skills, can't pick bottom and horizon isn't 10+ years, I'd say that Index Buy & Hope is pretty much dead for now.
YMMV.
regards,
Antti K.
thank you for your insight.
jay
Umbilical Cord Care
"Buy and Hope usually refers to people who hold major indexes or otherwise do not pick stocks meticulously and re-balance it several times a year."
Uh, is that YOUR definition????
Thin skin there Tim. You want to post a blog, expect some honest criticism. Or did you just include the comments section for "attaboys" and well wishes? I like your site. I visit it regularly and find it informative. But your post trumpeting a whopping 10 weeks of returns in 2009 in an environment of wild volatility in all asset classes as proof you're on the right path and many others aren't (I happen to think you are) sounds a whole lot like that of most financial "guru" wannabees selling their advice and I just called you out on it. Does it not occur to you that we're here because we want something different than the usual braggadoccio from fincial know-it-alls?
I'm well aware that your results in previous years were good, and I own many of the same assets you speak of owning. But you didn't mention those previous years in the post. Just 2009 (so far).
You can reflect on criticism honestly or you can bow up and get all pissy about it and blame the messenger.
You know good and well that it is not accurate to cite short periods of market fluctuations as "proof" of anything. Ask yourself this. What if someone critical of you came out citing 10 weeks in October-December as proof that gold and mining stocks were horrible choices? That would be a wrong conclusion. So why should you do the same? I was simply put off by the awkward and mercenary attempt at salesmanship on what has been a mostly informational blog, especially when it was backed up by relative fluff. If I'm too blunt about it, tough. Just delete the post and move on.
And as for my remaining "anonymous", too bad. You may want to join the facebook generation and throw yourself out on the internet in a spasm of narcissim, sharing where you live, your travels, weekly schedule, photos, etc. But I personally don't want some disturbed wack jobs harrassing me because they disagreed with something I said on the web. Your implication that I am somehow some sort of coward just because I don't give my name on the internet to thousands of strangers is childish.
You are selling financial advice. You are part of the FIRE economy. Excuse the rest of us with jobs in the real economy if we are a little distrustful of the motives and bold claims of a class of people who have corrupted our political system, and single handedly nearly destroyed the economy, the constitution, and the savings accounts of millions with their boasts, lies, wild claims, and distortions of results. One would think you would have the wisdom to realize that you should avoid even the appearance of being just like the rest of them.
I fear you've read way too much into the relationship between "buy and hold" investing and the ten week performance.
I think Tim was understandably miffed at being grouped in with the FIRE economy - he is anything but that and offers a valuable service that, in my estimation, can't be found anywhere else. I've been a subscriber for two years now and have found his weekly newsletter to be an invaluable aid, particularly last fall.
In case you are not familiar with the term, FIRE economy refers to the "paper intensive", New York based system of finance that results in 20-ish snot nosed kids on Wall Street driving Ferrarris, not some middle aged guy who saw through the whole charade years ago and sits in his pajamas in the mountains trying to help people manage their money for a pittance. Further, and I don't think Tim will mind me saying this, a large part of his "model portfolio" has nothing to do with paper at all.
Just my 2 cents.
Thanks George...
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