Written by Lance Roberts, Clarity Financial
My friend Greg Morris sent me fantastic chart this morning that goes to the very point of my recent discussion on the “Myth of Buy and Hold” investing. Since 1895, the Dow, using daily data, has spent just 4.32% of its time at “new highs.” The rest of the time, investors were simply making up previous losses.
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The important point here is that starting valuations matter “a lot” as to future returns. While it is absolutely true that given enough time a “buy and hold” investor will indeed make money, it will just be far short of the financial goals they planned on.
As I noted in yesterday’s missive on “Bear Market Repos:”
“Don’t ‘confuse the math.’ A 30-50% decline from any level in the market is destructive not only to your current principal value both also your financial goals particularly as it relates to you investing time horizon.”
“Time” is the one commodity we can’t get back.
