Buy and Hold Strategy For The Long Term...Rethink again

So what does the term buy-and- hold really mean? How long does one hold to consider oneself such an investor? Frankly, its just an academic jargon which is of no use debating over. Life is larger than this. We were reading up on Marc Faber cos he looks abit like Hannibel Lector in the movie and also because he said that it is a myth that stock markets go up generally in the long run. So well.. this guy is a smart guy..having gotten his PHD in economics at age 25 and having so much experience in the money markets of the world.....his comments is at least worth some consideration. Besides, conventional wisdom says that when one is young, start investing in equities as in the long run, equities in general rises. One can see this is by clicking on the charts for the DJIA (Dow Jones Industrial Average Index).

Taken from the book below......

" The average life expectancy of a multinational corporation-Fortune 500 or its equivalent-is between 40 and 50 years. This figure is based on most surveys of corporate births and deaths. A full one-third of the companies listed in the 1970 Fortune 500, for instance, had vanished by 1983-acquired, merged, or broken to pieces. Human beings have learned to survive, on aver-age, for 75 years or more, but there are very few companies that are that old and flourishing. "

And this research is based on Fortune 500 companies which are considered blue chips and therefore relatively considered less risky than those mid-cap or small- cap stocks. Its quite scary to think whats the average lifespan for mid-cap or small cap stocks then.....10-30 years? Therefore, it is imperative that one researches the stocks thoroughly before buying, instead of just buying many different stocks after a surface read-up on the company, in the guise of the oft-used word of "diversification".

Serves to remind one also to allocate at least 2-3 times a year to rebalance and relook at ones portfolio. Anyway, the authors also did a study on why some select few companies were able to grow beyond the lifespan of a normal company and one of the common factors is the financial prudence of the company management and board.

It terribly irks SGDividends when we receive glossy, thick annual reports every year! Save the money and trees..dudes!

Important: The objective of the articles in this blog is to set you thinking about the company before you invest your hard-earned money. Do not invest solely based on this article. Unlike House or Instituitional Analysts who have to maintain relations with corporations due to investment banking relations, generating commissions,e.t.c, SGDividends say things as it is, factually. Unlike Analyst who have to be "uptight" and "cheem", we make it simplified and cheapskate. -The Vigilante Investor, SGDividends Team

GloomBoomDoom Marc Faber Interview

This one of the best interviews we have seen. Nothing new but there are some things he said which is quite refreshing! Basically, the summary of this interview on 1 Dec 2008 is:
1)Buy and hold strategy is dead.Warren Buffet's approach is dead for 10 years and will be dead for another 10 years ........MEOW!
2)US and China economy is a total disaster
3)He is bullish on Gold
4)He thinks Treasury bonds is the next bubble
5)He thinks the global economy will take at least 5 years to recover
6)China's reserve of 2 trillion dollars in reserve is not much in proportion of the 1.3 billion population size.
7) The Chinese is not a good example on how to invest money as they has most of their holdings in USD treasury bills
8) Central bankers are making things worse by printing more money and should let more banks fail
9)Corporate bonds is worth to invest in
10)He expects the economy to go down very badly in 2009 and be a total disaster.

Marc Faber - Part 1

Marc Faber - Part 2

Important: The objective of the articles in this blog is to set you thinking about the company before you invest your hard-earned money. Do not invest solely based on this article. Unlike House or Instituitional Analysts who have to maintain relations with corporations due to investment banking relations, generating commissions,e.t.c, SGDividends say things as it is, factually. Unlike Analyst who have to be "uptight" and "cheem", we make it simplified and cheapskate. -The Vigilante Investor, SGDividends Team