Friday, June 12, 2009

Is buy-and-hold dead?

The old buy-and-hold strategy looks dead now. Today, hedge funds, using quantitative formulas and models that few understand, are investing billions in stocks. Unlike Warren Buffett's buy and hold forever, hedge funds trade in large volume selling in a day or a few hours. They can short without actually borrowing any stocks. They can own options and futures contracts. Basically, when a few hedge funds start targeting the same company, the party begins. Just have to make sure that whatever they're buying you're buying. And whatever they're selling, you're selling. Because you don't want to go against all the money and power they have.

1 comment:

  1. I still believe in buy and hold for certain good quality stocks. But I also believe in selling and switching to the next baby.