Buy and Hold Should Be Banned

The strategy underperforms and increases risk. You are receiving this email because you signed up to receive emails from True Market Insiders, rebranding to Sector Edge. [Unsubscribe here]( Keep the emails you value from falling into your spam folder. [Whitelist True Market Insiders](. Forgot your login information? Click [here](. [Image] Weekly Market Update Today is April 9, 2022 Hey TMI Subscriber, Jack Bogle, the grandfather of buy-and-hold investing, and the founder and chairman of mutual fund stalwart Vanguard Group, died three years ago. He always recommended, until that fateful day in January 2019, that investors “buy the haystack”, by holding a passive fund tracking a major stock market index — FOREVER. We couldn’t disagree more. Back in 2013, Bogle made a prediction on CNBC about the next decade, precisely where we find ourselves today. He said the next 10 years could be extremely turbulent for investors, and that they need to prepare for at least two declines of 25%-30%, and maybe even 50% over the next 10 years. He then said, in a rather matter-of-fact way, “The market goes up, and the market goes down. It’s never failed to recover from one of those 50% declines.” Bogle continued, “They’re kind of scary — often terrifying — but it’s typical. Why it doesn’t bother me is if you hang on through the cycle, that’s the only way to invest. "Trying to guess when it’s going to go way up, or way down is simply not a productive way to put your money to work.” His words of wisdom may have held some weight historically. But they’d bring little comfort to an investor who lost half their portfolio gains in 2020, or is paralyzed with fear today and still holding the same stocks today. Weathering storms may be prudent for the wealthy elite, but average investors can’t afford to lose that much of their financial security. However, that doesn’t seem to dissuade some people from employing a buy-and-hold strategy in some way, shape, or form — especially in retirement accounts. Buy-and-hold is an antiquated and under-performing strategy that often limits your upside and magnifies your downside. Let’s look at an example of buying and holding the S&P 500. Since 1957, Investing in the large-cap index has had an historic annualized return of 10.5%. In the same period, the worst drawdown has been -55% which occurred between November 2007 and March 2009. The prospect of losing five to eight times your potential return is an investor’s worst nightmare, yet this strategy is used frequently when buying and holding index and mutual funds in a 401(k). Consider that a 20% loss requires a 25% gain to get back to even. And that a 50% loss requires a 100% gain to get back to even. Investors who suffer losses like those miss out on the magic of compounded returns. Compounding works only if the return stream is consistent, and losses are kept small. The key, as you know as a TMI subscriber, is to buy the strongest stocks in the strongest sectors, which naturally means you’ll avoid the weakest stocks in the weakest sectors. Our relative strength and market breadth indicators are very reliable tools for separating the weak from the strong. It doesn’t matter what market climate you’re trying to navigate. In fact, it even applies to cryptocurrency. TMI’s resident expert Marco Wutzer takes what many consider the Wild, Wild West of investments, and tames it by knowing when to buy and sell. Buying and holding any type of cryptocurrency would be considered financial suicide in today’s universe so having a strategy for capturing profits and limiting risk is crucial. If you’d like to learn more from TMI’s crypto king, [watch this presentation by clicking here.]( Enjoy this week’s TMI articles, many of which celebrate National Financial Literacy Month. This Week in True Market Insider April 4 - April 8, 2022 [Micro-Cap Monday - How to Trade With Seasonality — Bill Spencer]( Used correctly, season patterns can and do point to outsized investment opportunities. However, Bill Spencer wants you to keep a few things in mind when you think about [seasonal stock market patterns](. [How Do You Interpret Volume Analysis — Chris Rowe]( It’s important to understand that volume doesn’t just validate a breakout above resistance or below support. Chris Rowe wants you to know that [volume can confirm or validate every kind of chart pattern](. [Why Ethereum Burned $6 Billion of Its Own Coin — Alex Houlihan]( Ethereum, the second largest crypto network, is on the brink of a major change as it strives for sustainability. And Alex Houlihan says the transition this summer may be the [biggest crypto event ever](. [Caution: Tanking Transports May Scramble Your Nest Egg — Costas Bocelli]( Two events happening in the stock market today are often a precursor to recession. But Costas Bocelli says not to worry about what might happen. Just take the proper steps to [mitigate risk]( in your portfolio today. [Here’s What Stocks Institutional Investors Are Buying — Karen Riccio]( If [big institutions]( want to buy a gazillion shares of something, and try to buy all those shares at once… what do you think happens to the price of that stock? Right, it goes up. Karen Riccio tells you what else happens. Copyright © 2022 True Market Insiders, All rights reserved. Our mailing address is: 7901 4th St. N STE 6113 St. Petersburg, FL 33702 Want to change how you receive these emails? You can [change your preferences here]( DISCLAIMER The information contained herein has been prepared without regard to any particular investor’s investment objectives, financial situation, and needs. 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This document does not purport to be complete description of the securities or commodities, markets or developments to which reference is made. Unless otherwise stated, performance numbers are based on pure price returns, not inclusive of dividends, fees, or other expenses. Past performance is not indicative of future results. Potential for profits is accompanied by possibility of loss. You should consider this strategy’s investment objectives, risks, charges and expenses before investing. The examples and information presented do not take into consideration commissions, tax implications, or other transaction costs. The material has been prepared or is distributed solely for information purposes and is not a solicitation or an offer to buy any security or instrument or to participate in any trading strategy. Some performance information presented is the result of back-tested performance. Back-tested performance is hypothetical (it does not reflect trading in actual accounts) and is provided for informational purposes to illustrate the effects of the True Market Insiders LLC strategy during a specific period. The relative strength strategy is NOT a guarantee. There may be times where all investments and strategies are unfavorable and depreciate in value. Relative Strength is a measure of price momentum based on historical price activity. Relative Strength is not predictive and there is no assurance that forecasts based on relative strength can be relied upon. Back-tested performance results have certain limitations. Such results do not represent the impact of material economic and market factors might have on an investor’s decision making process if the investors were actually managing money. Back-testing performance also differs from actual performance because it is achieved through retroactive application of a model investment methodology designed with the benefit of hindsight. True Market Insiders believes the data used in the testing to be from credible, reliable sources, however; True Market Insiders makes no representation or warranties of any kind as to the accuracy of such data. All available data representing the full platform of investment options is used for testing purposes.