Comments on: The Buy and Hold Forever Fallacy http://blog.canadian-dream-free-at-45.com/2009/02/24/the-buy-and-hold-forever-fallacy/ A Blog About Early Retirement and Happiness Tue, 07 Sep 2010 17:54:28 +0000 http://wordpress.org/?v=2.9.2 hourly 1 By: Moneymonk http://blog.canadian-dream-free-at-45.com/2009/02/24/the-buy-and-hold-forever-fallacy/comment-page-1/#comment-20584 Moneymonk Thu, 26 Feb 2009 21:28:22 +0000 http://blog.canadian-dream-free-at-45.com/?p=634#comment-20584 Buy and hold is laughable, I know the turtle beats the hare, but there have been 10 year periods where most people just broke even and was at a standstill I say do the both and hold and in addition to that have other investment strategies Buy and hold is laughable, I know the turtle beats the hare, but there have been 10 year periods where most people just broke even and was at a standstill

I say do the both and hold and in addition to that have other investment strategies

]]> By: Canadian Dream http://blog.canadian-dream-free-at-45.com/2009/02/24/the-buy-and-hold-forever-fallacy/comment-page-1/#comment-20531 Canadian Dream Wed, 25 Feb 2009 11:48:00 +0000 http://blog.canadian-dream-free-at-45.com/?p=634#comment-20531 GH & SP, Good points. Thanks for sharing. Trac, I don't mind Fire Calc either, but I don't consider it 'the' calculator. It does provide an interesting ability to run your situation through past events to see how you would do. Yet people sometimes get obsessed with getting high scores on it. Tim GH & SP,

Good points. Thanks for sharing.

Trac,

I don’t mind Fire Calc either, but I don’t consider it ‘the’ calculator. It does provide an interesting ability to run your situation through past events to see how you would do. Yet people sometimes get obsessed with getting high scores on it.

Tim

]]> By: Traciatim http://blog.canadian-dream-free-at-45.com/2009/02/24/the-buy-and-hold-forever-fallacy/comment-page-1/#comment-20509 Traciatim Tue, 24 Feb 2009 16:26:12 +0000 http://blog.canadian-dream-free-at-45.com/?p=634#comment-20509 I don't think it's very fair to compare the 1929 peak value and say that it takes until 1955 to recover from that peak. What happens if someone started in 1910, dollar costs the whole way through, reinvests dividends, and starts trying to live off of the proceeds after 40 years (1950 end point). What happens then during the crash? This is why I really like the retirement calculator over at Fire Calc. It runs through every rolling historical period for your strategy and tells you how you would have done and your success rate. I think this is much more appropriate for peopel planning to run through a few scenarios and see how things would have done in the past. I don’t think it’s very fair to compare the 1929 peak value and say that it takes until 1955 to recover from that peak.

What happens if someone started in 1910, dollar costs the whole way through, reinvests dividends, and starts trying to live off of the proceeds after 40 years (1950 end point). What happens then during the crash?

This is why I really like the retirement calculator over at Fire Calc. It runs through every rolling historical period for your strategy and tells you how you would have done and your success rate. I think this is much more appropriate for peopel planning to run through a few scenarios and see how things would have done in the past.

]]> By: Silicon Prairie http://blog.canadian-dream-free-at-45.com/2009/02/24/the-buy-and-hold-forever-fallacy/comment-page-1/#comment-20503 Silicon Prairie Tue, 24 Feb 2009 14:58:26 +0000 http://blog.canadian-dream-free-at-45.com/?p=634#comment-20503 If you're holding forever, the only return you get is from dividends. So then you have to look at the yield you're getting, how sure you are that it will continue, and what other investments you could buy that might have a higher yield. Not every stock will have a yield higher than a simple inflation-indexed bond. If you’re holding forever, the only return you get is from dividends. So then you have to look at the yield you’re getting, how sure you are that it will continue, and what other investments you could buy that might have a higher yield. Not every stock will have a yield higher than a simple inflation-indexed bond.

]]> By: Goal Hunter http://blog.canadian-dream-free-at-45.com/2009/02/24/the-buy-and-hold-forever-fallacy/comment-page-1/#comment-20502 Goal Hunter Tue, 24 Feb 2009 14:54:18 +0000 http://blog.canadian-dream-free-at-45.com/?p=634#comment-20502 Buy and hold to save taxes is certainly very reasonable. When you sell, you lose about 25% of the gain in taxes. This wouldn't be a problem if there weren't other ways to get at the money, but you can borrow against the gain and invest in something else for example. Buy and hold in an RRSP environment or TSFA is irrelevant. Sometimes you have to sell because there are better ways to use your money. It's just a financial decision. Sum up the costs and benefits of each alternative and take the best one. Buy and hold to save taxes is certainly very reasonable. When you sell, you lose about 25% of the gain in taxes. This wouldn’t be a problem if there weren’t other ways to get at the money, but you can borrow against the gain and invest in something else for example.

Buy and hold in an RRSP environment or TSFA is irrelevant.

Sometimes you have to sell because there are better ways to use your money. It’s just a financial decision. Sum up the costs and benefits of each alternative and take the best one.

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