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Rekenthaler Report

Not-So-Crazy Talk

Tactical asset allocation.

Moving With the Waves
Believing that buy-and-hold investing remains a valid investment concept, as I maintained on Friday, does not mean believing in a fixed portfolio allocation.

The case for buy-and-hold is easy. Before 2008, buy-and-hold investing had succeeded for several decades. Thus, to call for its demise is to argue that this time is different. It is hard to see why that would be so. Perhaps it made sense to toss aside the old rules in 1999, when the times truly did seem to be different, with stock valuations higher than they had ever been before, or have been since. But that is not when the warning against holding stocks for the long term was issued. Instead, it came after a market crash--when the message was compelling to listeners, but deeply unhelpful.