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Strategies & Market Trends : MDA - Market Direction Analysis
SPY 679.68+0.7%Nov 26 4:00 PM EST
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To: Michael Watkins who wrote (22382)8/6/1999 7:15:00 PM
From: pater tenebrarum  Read Replies (2) of 99985
 
Michael, the 'buy-and-hold' strategy touted by every single WS firm will in the end cost many people a lot of money. i have seen a comparison of buying and holding the SPX from 1970 to today vs. a simple mechanical strategy of selling when the SPX crosses it's 200-dma to the downside and buying back in when it recrosses to the upside. needless to say, 'buy-and-hold' was far less profitable. the absence of a bear market for 18 years has indeed instilled a level of complacency like never before. people's expectations w/regards to future stock market returns are at extremes. well, all i can say is that advocating a buy&hold approach after such an extended bull market with valuations as high as they are now borders on the criminal. people were very angry at the mutual fund industry in '74 and many sold right at the bear market lows as they couldn't stand the pain anymore and the newspaper headlines promised continuing doom, just as they hold out the promise of eternal prosperity now. the truth is that the more extended a bull market becomes time and valuation-wise, the more painful the bear market will be that inevitably follows it at some point.

regards,

hb
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