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20-03-2014, 12:26 PM
Is BUY & HOLD (CW) sure to make money?
Extract:-
{Another CW (aka BUY & HOLD) Master: Bill Miller
Bill Miller wasn’t as good as Warren Buffet at conventional wisdom investment, but he was still pretty darn good. His Legg Mason Capital Management Value Fund, beat the S&P 500 Index for 16 years in a row. However with the fall of the market in 2007 things began to change. Bill saw housing-related companies falling fast - companies like Freddie Mac and Fannie Mae. He didn’t see any fundamental problems. He just saw lots of bargains, especially in a long-term growing housing market. He was a long-term value investor like Warren Buffett in some ways. He saw other stocks that had fallen and he snapped them up because this was just a down cycle in a long-term growth cycle. He knew he was doing what any smart investor should do - buy when everyone else runs away because that’s where the money is made. In CW investing that’s exactly how you make money.
This kind of CW investing produced handsome returns for his mutual funds. At its peak, his funds had over $21 billion of assets under management.
Unfortunately, housing wasn’t in a short down cycle but in a long-term bubble burst. His performance collapsed. By 2011, he had lost money in four of the last five years. Fortunately, he was saved from even worse losses by the FED’s massive money printing with quantitative easing (QE1 & QE2). Still it was too much for Mr. Miller. He left the fund in 2011. As of June 2012, total assets under management were down to $1.8 billion and $10,000 invested in 1996 was worth about $8,300. The fund had lost everything it had made in over 15 years.
When the bubbles start to pop, CW(aka Buy & Hold) is not the place to be.}
NB:
What are you thinking now?
Me, there is no real guarantee in life.
Extract:-
{Another CW (aka BUY & HOLD) Master: Bill Miller
Bill Miller wasn’t as good as Warren Buffet at conventional wisdom investment, but he was still pretty darn good. His Legg Mason Capital Management Value Fund, beat the S&P 500 Index for 16 years in a row. However with the fall of the market in 2007 things began to change. Bill saw housing-related companies falling fast - companies like Freddie Mac and Fannie Mae. He didn’t see any fundamental problems. He just saw lots of bargains, especially in a long-term growing housing market. He was a long-term value investor like Warren Buffett in some ways. He saw other stocks that had fallen and he snapped them up because this was just a down cycle in a long-term growth cycle. He knew he was doing what any smart investor should do - buy when everyone else runs away because that’s where the money is made. In CW investing that’s exactly how you make money.
This kind of CW investing produced handsome returns for his mutual funds. At its peak, his funds had over $21 billion of assets under management.
Unfortunately, housing wasn’t in a short down cycle but in a long-term bubble burst. His performance collapsed. By 2011, he had lost money in four of the last five years. Fortunately, he was saved from even worse losses by the FED’s massive money printing with quantitative easing (QE1 & QE2). Still it was too much for Mr. Miller. He left the fund in 2011. As of June 2012, total assets under management were down to $1.8 billion and $10,000 invested in 1996 was worth about $8,300. The fund had lost everything it had made in over 15 years.
When the bubbles start to pop, CW(aka Buy & Hold) is not the place to be.}
NB:
What are you thinking now?
Me, there is no real guarantee in life.
WB:-
1) Rule # 1, do not lose money.
2) Rule # 2, refer to # 1.
3) Not until you can manage your emotions, you can manage your money.
Truism of Investments.
A) Buying a security is buying RISK not Return
B) You can control RISK (to a certain level, hopefully only.) But definitely not the outcome of the Return.
NB:-
My signature is meant for psychoing myself. No offence to anyone. i am trying not to lose money unnecessary anymore.
1) Rule # 1, do not lose money.
2) Rule # 2, refer to # 1.
3) Not until you can manage your emotions, you can manage your money.
Truism of Investments.
A) Buying a security is buying RISK not Return
B) You can control RISK (to a certain level, hopefully only.) But definitely not the outcome of the Return.
NB:-
My signature is meant for psychoing myself. No offence to anyone. i am trying not to lose money unnecessary anymore.