Richard, interesting article. Part of that article about greater/lesser stock market ("Does holding on to stocks bring greater wealth?") says this,
This question of whether an investor should buy and hold stocks for a long time is vitally important. Why? Not only is it a very popular strategy, but virtually all mutual funds are recommending that
investors follow this path today.
I often am intrigued by "professionals" that advise investors to act in a certain way, when they have a vested interest in having investors act that way.
I find it amusing that mutual fund managers recommend holding stocks for a long time. Why wouldn't they? If they advocated short term selling as even somewhat appropriate, a lot of mutual funds wouldn't exist any longer. They want to keep you in their mutual fund for 20 years because they make a lot more money for themselves that way. They would have you believe that this is the most correct course of action. If people were buying and selling mutual funds with the ups and downs of the market, a lot of mutual fund managers would be out of jobs. I personally know someone who, had they listened to my advise on selling their mutual fund before October 1997 (September), and re-purchased the same fund in November or December would have instead of losing $3000 in value in a little over one month, and having to make that loss up, would have been up more than $5000 by the time it came back to the same price. If management expense ratios or "loads" permit, I believe that it is more advantageous to buy and sell mutual funds in the lows and high, and ride it like the roller coaster ride that it is. Instead of forgetting about it and saying that you made so much over 5 or 10 years, selling and re-buying your mutual fund at least once a year would, in my opinion, be more profitable. |
