Trading Tips for Online Trading / Investing: Buy, Hold, and Hope

The majorities of Americans, who use online trading or investing, are proponents of the buy, hold and hope strategy. They are heavily invested in equities on a “long term basis” and are not concerned about the daily (or weekly, or monthly, or yearly) ups and downs of the market because they rest easy in the knowledge that the market will go up over the long term. So they buy ’em, hold ’em, and are confident or hope that everything works out all right with their online trading or investing strategy.

But how long is the long term anyway? 5 years? 10 years? How about 20 years? And how comfortable are these online trading or investors when the market is actually going down for extended periods of time? Let’s look at some data to try and put this buy, hold, and hope strategy into perspective. The following table shows the major down moves for the Dow Jones Industrial Averages in the past 100 years:

Stock Market Graph

Stock Market Graph

The data shows four periods where the market fell anywhere from 36% to 89% and required 5 years to 25 years to recover. Looks like the long term online trading or investor during those periods had to wait several years just to break even (and required a lot of intestinal fortitude as well). If you think this is a phenomenon of the past, look at the last row on the chart. We are currently at 3 years and counting, waiting for the market to get back to breakeven from the 2000 peak.

If someone told you that you may have to wait 5 to 25 years to breakeven on your investment strategy would you be a willing online trading investor? I doubt it. But that is exactly what millions are doing with their buy, hold, and hope strategy – that is what you call a losing proposition and is not how savvy investors make money.

This is another reason for considering alternative investments for a portion of your portfolio and online trading investing career. Look at a good trading system that provides superior returns in non-correlated markets.

Written by: Bill Poulos

If you have a computer and a burning desire to seize
success, then you have what it takes to personally
unearth Bill’s Astonishing, step by step trading

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