Buy And Hold Is Not Dead

I just read a bullish article about Starbucks (client and personal holding). You either buy into the growth or you don't and you can either live the high volatility or you can't.

I do and I can, personally and for some clients.

There has been a lot of buy and hold does not work anymore over the last few years. I don't believe that in such absolute terms. If you implement a portfolio today with 50 stocks, a lot of the names you pick could easily stay in there for many years. A best of breed stock today has a good chance of being a best of breed stock five years from now. In the interest of diversification some of what you have should be best of breed, not all but some. Some other names, maybe, are bought with the expectation that they would be not be held forever, that's ok too.

I think a better way to look at this is blindly buying and holding may be dead. A do-it-yourselfer that wants to own stocks has to be prepared to follow those stocks and decide a head of time what sort of catalyst necessitates changes.

When I buy a stock I hope that it can do exactly what I hope and that I can hold it for a long time. When a stock does much worse or much better than expected I sell it. This is more of the bottom up part of what I do.

Top down-wise if I think there is a need to get defensive I tend to sell half positions of stocks that I still like if something has to be sold. I recently cut a couple of core holdings in half. I will likely buy them back but I still have some exposure.