Misconceptions about Buy-and-Hold investing

You may see in many forms of media, blogs and forums, lot of skepticism, questioning and criticism of one of the favorite methods of investing called ‘buy and hold’.

As the title of this method implies, it is an investing method where an investor selects investment instruments, buys them at a suitable price and holds them for a long time before selling/realizing them.

Buy and hold sometimes also means that securities are not sold even when there is a fall in price and there is a prospect of loss of a short term nature.

Buy and hold does not imply buy and hold for ever or holding on regardless of the investment environment or objective.

It is a species of long-term investing which has many advantages with the caveat that it is done judiciously and with knowledge of the investing process required to achieve the best possible outcome.

To understand some of the criticisms voiced around buy and hold investing, lets try to distinguish between buy-hold investing and buy-hold process

Many people use the buy-hold process while dealing with many investments or financial instruments. That does not necessarily mean that such people do or understand buy and hold investing.

401K process or Mutual Funds buying is often cited as instances of buy and hold investing. Many critics seize upon these examples to pronounce the irrelevance of buy and hold investing.

401K process or Mutual Funds buying the way it is done whether in US or the rest of the world is more like entrusting your savings to your broker and letting him do it all for you. The difference is that the broker is a very big institution that is holding millions of similar accounts. Also while a participant in the 401K scheme or Mutual Fund thinks that he/she is into buy and hold or long term investing, the institution managing her money is most probably not.

Buy and hold investing is also not the same as 'buy and forget' investing which is apparently what many 401K and Mutual Funds participants are apparently doing.

Online resources for Investing in US

Whether you are investing or trading, internet and technology provides a lot of help (most of it free)

Regardless of whether you are a professional or a novice investor/trader, some of these resources are really worth checking out

Yahoo Finance center http://biz.yahoo.com/r/ is very good place to start. It is titled the Stock Research Center, but it also has tools for options and bonds. It's stock screeners are very good. Also check out the Analyst research center

Smartmoney website from WSJ http://www.smartmoney.com/tools/ is worth looking and using for investment and trading analysis purposes.

Zacks http://www.zacks.com/ is an investment advisory service that also provides some free investment and trading tools. Registration is free and that will get you 4 stock picks every day the market via email. Of course registration is not required for viewing the stock picks and other investing ideas.

Investor Business Daily's internet version http://www.investors.com/default.aspx may prove a good resource for momentum investors and traders. This is not a free service, though they have a 4 week trial offer, which may seek your Credit Card info. It also entitles you to 2 weeks of free trial of the paper version

Morningstar http://www.morningstar.com/ usually associated with Mutual Fund ratings is also a useful resource for fundamental and value oriented investors

Vector Vest http://vectorvest.com/ is also a well-known resource for traders and uses a black box stocks screening system. It is pricey, though it has a 5 week trial offer for $ 9.95. But as with all trial offers, buyer beware.

This is just a peek into the resources that are available for the lovers of investing. There are lots. We will cover them more as we go along

For the diligent investor/trader there is no shortage of help

Spoilsports for continuing market rally?

The DOW Jones was marginally down by 16 points. The S&P 500 ended up marginally.

The expiry of a lot of options contracts was supposed to cause volatility and even an upward spike to the indices. But looks like that did not materialize

The cause of the flat note to the week ending was attributed to falling crude oil prices by the financial media. Strange! since last week rising trend in Oil prices was feared to pre-empt any slow recovery

Some media pundits saw encouraging signs for a global economic recovery in US data, which only seems to confirm that media does not have a clue what it is talking about

These so-called encouraging signs were jobless claims data, philly Fed survey and US factory data. At this point it is difficult to comment on these without more analysis

But a look at this week's market points to a flagging rally. While a rise cannot be ruled out, there is hardly anything changing at the ground-level to support market enthusiasm for a US recovery

The absence of any significant news from now to the middle of next month may help to keep the US market range-bound, we can expect the following red flags in the coming months

• Negative GDP growth in the 2nd quarter as against a marginally postive one forecast by the Wall Street bulls
• Poor 2nd quarter results from the DJIA and SP 500 bellweathers which may push the index EPS further down
• Economic deterioration in the Eurozone with more trouble in UK & Irealand
• More bankruptcies from the impending commercial real estate decline/crash( Extended Stay has entered Chapter 11)
• Worsening conditions in the Consumer-disretionary sector (Eddie Baeur has filed for bankruptcy)

Trade cautiously the rest of this month