It used to be that buy and hold was king. Now that stock investing strategy is pretty much dead, if the powers that be have any say in it.
Take a look at sites like GetBucks.com, Kapitall.com, and Invstr.com and you will see what the younger generations are being sold. Those sites are teaching young investors to trade stocks on their phones and trying to get them excited about the thrill and rush of being in the stock market game. You can start with a free account and free virtual dollars in each of them but clearly, the hope is to get you to load up real dollars and trade for real.
The stock market and investing in stocks isn't a game but increasingly the industry wants you to view it as such. The deep discount brokers, CNBC, Bloomberg TV, and all the other heavyweight industry titans hope to get you excited about trading stocks. Buying and holding is boring and extremely "hands off". The only way to be "hands on" with your investments is to buy and sell on at least a relatively frequent basis. That what they want you to believe.
Have you watch Cramer lately on CNBC? Now thats the biggest hype guy out there. For the last 3 months or so he has repeatedly stressed that with AAPL you need to buy and hold that stock and NOT trade it. Stressing the "buy and hold" is apparently so different than what you would do with other stocks that he needs to continually make a big deal of it.
In today's society, so many people are addicted to their device screens and this is especially true for 20 to 40 year olds. Instant gratification is what everyone craves and demands. That is why trading stocks is so popular. You get in, you get out, and you see a result right away. EXCITING!
Buy and hold? Thats old school now and not the way its done anymore. Its too bad because in my life I have made most of my money by buying good companies and holding on for a year or more. I take those dividends and put them away for retirement or use them to buy more stock. Buy and hold isn't dead with me but to new investors they might never have a chance to even understand that is even an option.
Millennials Are Being Taught To Trade Stocks Rather Than Buy And Hold
USING CHARTS TO BUY STOCKS - ITS HARD!
Gary B. Smith is on Fox Business News as a frequent guest analyst and he also is a regular commentator on a show called "Bulls & Bears". His nickname is "The Chartman" because his expertise is picking stocks by just looking at their charts. Thats it....he doesn't care what a company does or anything else about it....he only cares about its chart.
Since I have never picked a stock solely on the basis of what the chart looks like, I can't personally vouch for whether a person can really make money over the long term that way. But one thing I do know, if you invest only on the basis of a stock's chart, you will be doing a lot of short term trading and you better keep abreast of what is happening on a daily basis because one break in the chart's pattern means you need to sell or buy.
Can buying and selling stocks purely based on their charts really be called investing? I guess it can because the definition of the word mentions only that you put money to use with the expectation of making a profit. But if charts are the only way you pick stocks, it sure seems like you need to devote a tremendous amount of time to the endeavor because it isn't easy. Charts have an endless number of patterns and interpretations and mastering a winning strategy seems to be out of reach for most investors.
Interestingly, in Gary's latest article, he talks about investing for his daughter's future. I don't know what their ages are and he doesn't say but based on his age, they are perhaps between 10 and 18 years old. Does he talk about teaching them the charting process and daily grind of chart analysis? Nope. Seems like he prefers the old long term buy and hold a solid stock method for his daughters who have many years ahead of them before retirement.
He picks two stocks (ExxonMobile and Waste Management) because they presumably will stand the test of time and be around for the next 50 years. Putting stocks you know are solid picks in your portfolio seems to be what he would suggest for own daughters. That has to make you wonder about the validity and difficulty of his preferred investing style of chart analysis.
Again, I know some people are able to make money in the stock market just by analyzing charts. However, for the vast majority of investors, that seems like something that is just not feasible because of the complexity and the high number of hours it would require to learn. For most people, it is best just to pick good companies, buy their stocks, and watch them grow over the long term.
DOES BUY AND HOLD WORK IN 2008?
Buy and hold used to be the way to go in the stock market. Buy a good solid stock, hold it for five, ten, even twenty years and you would show a profit. The stock market seemed to go up slowly but steadily. Don't gamble on stock's the gurus said, INVEST in them.
Does the buy and hold stock strategy work in 2008? In fact, has it worked at all in the last ten years or so? Stocks strategies for beginners is one of the most difficult things to get a grasp of. Buying a stock is easy, you just go online, click a few buttons, and you have bought your stock. When you should sell that stock, however, is always the hardest decision.
Stocks seem to fluctuate more now than they did years ago. With the advent of the Internet and day trading, so many dummies and beginners have come into the market who really aren't investors. They are traders trying to make a quick buck and it is almost like they think they are playing a video game. These stock day traders are in and out of stocks so fast it can make your head spin. They are in fact the opposite of the buy and hold investor.
In addition to the online day traders, there have been big events like 9/11, Enron, and other big companies going bankrupt and having shady dealings. These events all work to take down the stock market in days. They undo years of steady progress and in weeks take down the stock market to levels it was years ago.
Buying and holding used to be sound stock investment strategy. You could put your money away in a group of stocks and be reasonably confident you would get back more in many years time. There was no real need to keep up daily with the stock market news because you could feel confident over time your stocks would go up. Is this true today? I think not and this is why it is harder now for beginner stock investors to understand the market and get started investing. The stock market for dummies has gotten more difficult to negotiate the ups and downs.
