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Strategies & Market Trends : Waiting for the big Kahuna
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To: Pancho Villa who wrote (11016)12/6/1997 5:45:00 PM
From: Tommaso  Read Replies (2) of 94695
 
Just as everyone says, buy and hold is best provided when you buy it's not at the top of a bubble--again, as many people will say.

My own experiment consisted of buying (in order to get their quarterly and annual reports) $25 each (using the Merrill Lynch Sharedbuilder program)in a dozen or so closed-end stock funds back about 1980.

I have had dividends reinvested in all of them since then.

The venerable Madison Fund was acquired by some guys who thought they could ride the energy boom and go all into oil and gas. After many evolutions that $25 is worth about $8.

But all the rest (some changing names, being acquired, open-ended) have appreciated about sixfold on average. Some eightfold.

But when valuations are overdone in comparison with anything one can find in the past, it's not the time to start holding.

I have mentioned this so often that I expect to be accused of being a shill for the fund, but BEARX (Prudent Bear) with a diversified portfolio of short positions in high P/E tech stocks and others is now my major holding.

When you look at history, you can see things getting even crazier--South Sea Bubble, etc. So who knows when the big bust will come or why. When it does come it's going to be a lot worse than it would have been a year ago. Early this year I was saying complacently, "remember, this is not 1929." It's still not 1929, but I think that anyone who has been in cash since 1995 may eventually be happy about having got into that position.
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