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Faber: Buffett Buy-and-Hold Method Dead

By    |   Thursday, 04 Dec 2008 12:25 PM

Investors need to try a new tactic of investing and abandon Warren Buffett's method of investing, says stock guru Marc Faber.

The old tried-and-true method of holding stocks for the long term is dead, says Faber, editor and publisher of The Gloom, Boom & Doom Report. He said the market is now a "trader's market."

"The Warren Buffett approach will be dead for next 10 years," Faber predicts.

Investors should expect huge volatility in the markets constantly and refrain from holding stocks for one to two years, he says.

"I believe that we've moved into an environment of very high volatility where you will have up and down moves of 20 percent all the time," Faber says.

All markets will continue to see "big swings" and the average investor will have a difficult time navigating between the equities, commodities, and foreign currency markets, along with interest rates, he says.

"We can have huge rebounds and huge downturns," Faber says.

The best thing for an investor is to trade in small amounts and avoid taking "big risks," he says. "If you really throw a lot of money at the system you may boost everything, but not in real terms," Faber says.

Discipline is important, but it's also key to recognize when buy-and-hold is buying you big trouble, says Joe Barrato, chief executive and director of investment strategies at Arrow Funds.

"You need to take advantage of the cycles. Yes, the market's going to drop 10 percent. But then it's going to be up 20 percent," he tells SmartMoney.

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Investors need to try a new tactic of investing and abandon Warren Buffett's method of investing, says stock guru Marc Faber.The old tried-and-true method of holding stocks for the long term is dead, says Faber, editor and publisher of The Gloom, Boom & Doom Report. He said...
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2008-25-04
Thursday, 04 Dec 2008 12:25 PM
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