Tags: Hulbert | buy | hold | strategy

Hulbert: Buy-and-Hold Strategy Wins Out Long Term

By Dan Weil   |   Monday, 05 Aug 2013 12:45 PM

Mark Hulbert, editor of the Hulbert Financial Digest, voices hearty approval for the buy-and-hold investment philosophy.

"Good old-fashioned buy-and-hold investing might not be exciting enough to interest day traders," he writes in The Wall Street Journal. "But it can nevertheless produce exciting longer-term returns — and beat out newfangled strategies."

That's proven in the Hulbert Financial Digest's five-year rankings, through June 30, of more than 200 investment-advisory services. The top three services in those rankings "all buy and hold quality companies," he says.

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All three are newsletters published by The Motley Fool — Inside Value, Rule Breakers and Stock Advisor. They generated average annual returns of 18 percent, 16 percent and 15 percent, respectively, over the five-year period.

That compares with a 7.2 percent return for the Wilshire 5000 index.

Motley Fool's strategy includes holding stocks through bear markets. Investors who exit stocks during slumps rarely get back in time to catch the majority of the rebound afterward, Andy Cross, Motley Fool's chief investment officer, told Hulbert.

"Trying to figure out when to invest is a fool's errand," Cross said. So Motley Fool recommends investors adopt "the practice of regularly investing as much as they can" in stocks.

Money manager John Hussman, president of Hussman Investment Trust, writes in a commentary on his firm's website that some investors fall prey to adopting a buy-and-hold strategy when the market's at a top, but then abandon it at the bottom.

"The most important part of a buy-and-hold discipline is the commitment to remain passive even as it experiences massive interim losses," he says.

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