You’ve probably already visited and downloaded the Liberated Investor Tool Kit—IF not, read this first and then go download the eBook and get the free tools.
If your advisor adheres to a “Buy and Hold” philosophy there is good news and bad. The good news is that he or she is disciplined. The bad news: you’re going to participate in all the down markets.
The “Buy and Hold” idea states that staying put in the markets has a long precedent for serving investors. That running in or out of the market at the first sign of trouble can cause long-term loss or missed opportunities.
But what about 2008? What about, specifically, October of 2008? How did you fair in the markets then? What if you weren’t in the market in 2008? How would you have felt if you’d lost 20% of your wealth? This is a conservative estimate of the losses many Americans suffered because the predominant investor model of “Buy and Hold” defied logic and dragged investors down.
[graphic: S&P 500 with the dips]
What is important to know about the “Buy and Hold” stance is that is based on knowing whether or not we are in Bear or a Bull market. Sounds easy but for investors today in our whirlwind of markets, we just don’t know from one day to the next. And for your advisor, they don’t really know either but they conveniently rely on a model that protects commissions and unfortunately drags the investor through the downturns.
Investors should look at cash as an asset class worthy of investing in and when the risks are too high they should get out of the markets. Risk directs action and if investors see too much they should pull out.
Want to know what assets classes we look at? One of the follow up tools we will send to those who have downloaded the Liberated Investor Tool Kit, is an outline of the assets and how we rank them.