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starbucks4ever (97.07)

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June 09, 2009 – Comments (13)

Now, tired of guiding subscribers from one paper loss to another, Tom Gardner has finally admitted that LTBH doesn't work. And this is where I beg to disagree. The MF has been touting Buffett's example for years, but it didn't occur to them that the real Buffett would never have started to emulate Buffett until the moment the cult of Buffett has faded. That moment has finally arrived. With the formely permabullish Tom Gardner guiding the lemmings into complicated option strategies, we are now witnessing very obvious signs of capitulation on LTBHers' part. The road is clear. Rather than follow the pied piper, it is now time to adopt LTBH as the only working strategy for the next decade. As to the "Pro" subscribers, they are chasing the next hot strategy that will work wonders for them two years ago (the choice of verb tense in this sentence is deliberate, because this is the rationale behind this new strategy - they are still preparing for the last war). Now is the time to buy and forget about the market for 10 years.

13 Comments – Post Your Own

#1) On June 09, 2009 at 2:33 AM, portefeuille (99.60) wrote:

great post!!!

the article by tom gardner

To see what he thinks about non-paying users of this site have a look at this post (oh yes, I almost forgot to mention that he has held numerous speeches that prove that that is not really what he is thinking. context is very important ...).

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#2) On June 09, 2009 at 3:45 AM, kaskoosek (54.91) wrote:

+1

 

Good post 

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#3) On June 09, 2009 at 4:40 AM, awallejr (83.89) wrote:

Have to agree here Zloj.  Bear markets can always be unnerving, but they are always temporary on a "forever" increasing market.  However, that doesn't mean that you can't use option strategies for short term action.

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#4) On June 09, 2009 at 10:06 AM, rofgile (99.31) wrote:

Excellent post - 

 Especially now (very especially in March) - there are lots of stocks at a good value - P/E of 8 and lower, that have potential for growth in earnings in the future.

 Its a good time to invest, not speculate on short term gains or on shorting stocks for a mythical fall.

 Investing should be a long term idea - a 3-5 year commitment to ownership in a company - with an earlier selling out perhaps if some unknown fact comes to light that might sour your perspective on the companies prospects. 

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#5) On June 09, 2009 at 11:35 AM, BradAllenton (31.37) wrote:

People like B&H for one reason. It's easy.... all you have to do is pick a stock and sit on it. The reality is people want it to work because they are lazy. No system is an all weather system, there are times to B&H and times to shift money from one asset class to another. B&H has become a popular mantra not because it works or doesn't work, but because of human nature to gravitate to a strategy that requires less effort.

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#6) On June 09, 2009 at 11:55 AM, awallejr (83.89) wrote:

I don't think that's the reason at all Brad.  People probably do follow the market daily anyway.  What people want is to invest not trade.  Average investor should leave the trading to the pros in the end. But you are right, you do still have to monitor your portfolio since the thesis for picking any given stock may change.  A Bear market, however, does kill "longs" unless you  use options to protect your positions.  But it also creates new opportunities since Bear markets are "temporary corrections" in an ever rising market. We will be over 14,000 again in time, just don't expect that in the near future, but 10+ years from now?

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#7) On June 09, 2009 at 12:31 PM, BradAllenton (31.37) wrote:

Awallejr, "What people want is to invest not trade"

Why? Why would this be the road of choice? To trade is hard and it take energy and thought. To buy with a 10yr time line is pretty simple. Don't forget we are dealing with humans and all humans lean toward the easy way vs the hard way.

Think about it: Trade- take in macro and mico data, make a thesis, look for a set up, set an entry, set an exit. Take profit if you are right, take responsibility if you are wrong. Manage the tax details and book keeping.

To invest: Buy DIS wait 10yrs, watch it go up, watch it go down, sell it when you feel like it or gift it to your kids. If you are wrong don't do anything, if you are right don't do anything.

As you can see people rally behind the B&H because it is easy to understand. You don't have to step up and make real decisions or "work" at it. I can't tell you how many times I have watched people buy stocks, get killed on the entry and then say " well I bought it for the long term anyway, so it will come back"  The hardest part of being a trader is mastering your own mind and that is why most people love B&H. It is also why they defend it.

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#8) On June 09, 2009 at 12:37 PM, starbucks4ever (97.07) wrote:

I think trading is the road of choice for many because it's always flattering to think that you're smarter than the guy on the other side of the trade...

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#9) On June 09, 2009 at 12:48 PM, BradAllenton (31.37) wrote:

 zloj- That was very well thought out. Thanks for your contribution to the conversation.

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#10) On June 09, 2009 at 1:50 PM, walt373 (99.80) wrote:

The reason people want to invest instead of trade is because investing is a positive sum game while trading is a zero sum game. The long-run behavior of stocks is up, as long as the underlying economy isn't in too serious and deep-rooted problems (that's clearly where the current debate is, but that's another topic). The transaction fees and taxes incurred in frequent trading negates this upward bias. Basically, as investors, everybody can be a winner, which is impossible for all traders.

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#11) On June 09, 2009 at 5:53 PM, awallejr (83.89) wrote:

"The hardest part of being a trader is mastering your own mind and that is why most people love B&H. It is also why they defend it."

I disagree.  Trading involves timing more than anything, or plain luck.  Most people can't be watching the computer monitor all day since it might interfere with their actual jobs.  With B&H you are trying to accumulate wealth.  For B&H I want solid dividend paying stocks or spotting those small caps that have major future potential (MSFT?).  Now playing options off your longs is a way to trade I suppose.

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#12) On June 11, 2009 at 6:18 AM, camistocks (< 20) wrote:

If you listen to (short term) traders you might think that they have a fantastic long term track record. Which is simply not true. We just had a brutal bear market and so shorting seemed to make so much money (especially with the elimination of the uptick rule). However traders never talk about their losses...

Buy and Hold works, as long as the underlying trend is still intact.

I like to say that "trading" is almost like a computer game. ;-) 

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#13) On June 20, 2009 at 8:55 AM, whereaminow (20.71) wrote:

zloj,

I missed this post while I was on vacation. It's excellent!  I wish I had thought of it myself lol. And I would bet that you're absolutely right.

David in Qatar

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