buy and hold and weep

BUY AND HOLD AND WEEP By Daryl Guppy If you didn’t already guess it, then you know that long term investing is dead. It’s so dead that it actually stinks. The idea should be consigned to the dustbin of history and replaced with more up to date thinking. It’s part of the core belief that influences the way we look at market outlooks over the next six months. You want proof? Take a look at the S&P monthly chart. We are routinely told by investment advisors that we should invest for the long term. Well, let’s put them to task at take a 15 year time frame. Forget individual stock picking because that’s a waste of time. Evidence ? Where are Enron, World Com, and other giants of the blue ribbon investment world? Delisted and busted. The reality is you cannot tell who or who will not survive so we can only use the index for this exercise. The investors who entered at point 1 in 1998 has made a 31% return over 15 years. That’s about 2% per year!!! The investor who entered at point 2 has made essentially a ZERO return over 13 years. During that time he has twice suffered a 48% drawdown. The investors who entered at point 3 has in theory made a 93% return over 12 years but he has watched his capital go from a 93% return and then drop to below zero in 2009. This is still an average of 7.75% per year. The message is clear. The money comes from trading the rally up trends. It ’s also made trading short on the retreats. You do not have to buy exact tops and bottoms to make a better return. Returns on capital from investing do not come from buy and hold. After years there may be an opportunity to profit from buy and hold with the S&P - but only if you can break a 15 year habit and sell to lock in a profit. The breakout above 1550 is bullish because it’s a move above a triple top pattern. We expect to see some pullbacks perhaps in the order of 20%. This develops a consolidation around the 1550 resistance level. We expect to see the S&P close higher at the end of 2013. This is a bullish trend, but it contains the potential to retreat towards 1400 before the next longer term trend rebound develops.

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Guppys buy and hold weep

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BUY AND HOLD AND WEEP By Daryl Guppy

If you didnt already guess it, then you know that long term investing is dead. Its so dead

that it actually stinks. The idea should be consigned to the dustbin of history and replaced with more up to date thinking. Its part of the core belief that influences the way we look at market outlooks over the next six months.

You want proof? Take a look at the S&P monthly chart. We are routinely told by investment advisors that we should invest for the long term. Well, lets put them to task at take a 15 year time frame.

Forget individual stock picking because thats a waste of time. Evidence ? Where are Enron, World Com, and other giants of the blue ribbon investment world? Delisted and busted. The reality is you cannot tell who or who will not survive so we can only use the index for this exercise.

The investors who entered at point 1 in 1998 has made a 31% return over 15 years. Thats about 2% per year!!! The investor who entered at point 2 has made essentially a ZERO return over 13 years. During that time he has twice suffered a 48% drawdown. The investors who entered at point 3 has in theory made a 93% return over 12 years but he has watched his capital go from a 93% return and then drop to below zero in 2009. This is still an average of 7.75% per year.

The message is clear. The money comes from trading the rally up trends. Its also made trading short on the retreats. You do not have to buy exact tops and bottoms to make a better return. Returns on capital from investing do not come from buy and hold.

After years there may be an opportunity to profit from buy and hold with the S&P - but only if you can break a 15 year habit and sell to lock in a profit. The breakout above 1550 is bullish because its a move above a triple top pattern. We expect to see some pullbacks perhaps in the order of 20%. This develops a consolidation around the 1550 resistance level. We expect to see the S&P close higher at the end of 2013. This is a bullish trend, but it contains the potential to retreat towards 1400 before the next longer term trend rebound develops.
This 20% retreat is validated with the NASDAQ. (Dont even think about the buy and hold approach in this market. Its still well below the March 2000 peaks near 4800. ) The NASDAQ is in a steady uptrend. It has reacted away from the first resistance level and this is expected. It can slip back to 3100 and remain in the longer term uptrend. The upside targets are near 4100. This is a better trending environment than the S&P

INDICATOR REVISION TRADING BANDS The walls of a trading band are defined by a set move above and below the median price. These walls are parallel to the median price which is usually calculated on a 10 day simple moving average. Trading bands provide trading opportunities based on the consistent price movement between the walls of the band. Trading bands provide an idea of under and overvalued prices.