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Death to 'Buy and Hold': No Slowing Down 'Fast Money's' Macke and Adami

Posted Dec 08, 2008 04:37pm EST by Aaron Task in Investing, Commodities

Editor's Note: At Minyanville.com's "Festivus" holiday event in NYC last week, the main focus was celebrating community, Hoofy & Boo's Emmy, and raising donations for a worthy cause: The Ruby Peck Foundation.

But in a room full of traders, strategists and investors, it's hard not to talk about stocks, too. Tech Ticker was on hand at the event and conducted a series of interviews with various attendees, including some familiar names and names all savvy investors should know. Stay tuned, as we'll be publishing the series over the coming days.

(Click here for part one: Coin-Flip: Cash King for FTN's Dwyer, Greener Pastures for Minyanville's Harrison)

Note: The interviews were conducted Dec. 4 and prior to the Bacchanalian celebration that ensued later in the evening — or so we heard.

As contributors to CNBC's Fast Money, Jeff Macke and Guy Adami are accustomed to talking about short-term trades for people with quick trigger fingers. So I figured it'd be a nice change of pace to get their advice for true long-term investors.

It was a change of pace, but "nice" isn't the word.

The long-term investor is dead," says Macke. "Until the market stabilizes and people from the government stop changing the rules, 'buy & hold' is a sucker's strategy."

Adami agrees: "You shouldn't be watching if you're a long-term investor," he says. "You're just torturing yourself. It's not a viable strategy."

Having said that, Adami and Macke disagreed on just about everything else.

Adami believes there are opportunities in financials like US Bancorp, "the most conservative management" in the industry. He's also bullish on commodities generally, notably gold, but not until 2009 because of ongoing deleveraging in the hedge fund sector. (Clearly, that wasn't a deterrent on Monday as commodities soared.)

However, Macke says financials are "unknowable — a black hole of death."

As for commodities, he says they are "behaving like every burst bubble in history," and the charts of producers like Potash and U.S. Steel look just like Cisco after its bubble burst in 2000.

He prefers more stable companies with easily understandable balance sheets like McDonald's.

But, again, just for a trade.

86 Comments

- Monday December 08, 2008 04:40PM EST

wow! the bald guy woke up!

Yahoo! Finance User
Yahoo! Finance User - Monday December 08, 2008 04:45PM EST

To "Buy and holders", losses are locked every day when the market closes. If it is a loser, dump it and move on. There is always another opportunity or you can buy it back in the future.

Yahoo! Finance User
Yahoo! Finance User - Monday December 08, 2008 04:51PM EST

I think the little guy should leave his money where it is if he doesn't need it. By pulling out money all the little guy is doing is lowering the price of the stock so the rich guy can come in and buy them up at the lower price and add to his fortune. Fear and greed are running the market right now.

- Monday December 08, 2008 04:51PM EST

Loser!

- Monday December 08, 2008 04:53PM EST

It will be interesting to see if the word "investor" is removed from newly printed 2009 dictionaries.

- Monday December 08, 2008 04:58PM EST

Ask the Japaneese what they think about a Long Term Strategy. And the people that lost 50per cent plus in their pension funds.

Yahoo! Finance User
Yahoo! Finance User - Monday December 08, 2008 05:01PM EST

Back when stock investing was all about finding good companies, buy and hold was logical. Good companies had good long term prospects. Now, investing is a game of roulette, manipulated by inside traders with little fundamental logic. It's a game designed for the "house" to win by creating unpredictable movements in stock price that nothing to do with value and much more to do with the act of trading.

Yahoo! Finance User
Yahoo! Finance User - Monday December 08, 2008 05:01PM EST

Back when stock investing was all about finding good companies, buy and hold was logical. Good companies had good long term prospects. Now, investing is a game of roulette, manipulated by inside traders with little fundamental logic. It's a game designed for the "house" to win by creating unpredictable movements in stock price that nothing to do with value and much more to do with the act of trading.

Yahoo! Finance User
Yahoo! Finance User - Monday December 08, 2008 05:01PM EST

Back when stock investing was all about finding good companies, buy and hold was logical. Good companies had good long term prospects. Now, investing is a game of roulette, manipulated by inside traders with little fundamental logic. It's a game designed for the "house" to win by creating unpredictable movements in stock price that nothing to do with value and much more to do with the act of trading.

- Monday December 08, 2008 05:01PM EST

No long term investing...just in time for the baby-boomers who thought they were saving all their lives so they could retire some day. Well, now that half of their 401K is gone (and still declining), what do they do?! Wake up!!! We are all being fleeced!!! Baaaa, Baaaa

- Monday December 08, 2008 05:09PM EST

Lets face it! You only really lose money at the moment you sell! Otherwise it is just an INVESTMENT that is lowered, but if it is an INVESTMENT, is that really long term?

- Monday December 08, 2008 05:19PM EST

Anyone realize how lopsided stocks are? Take for example, if you want to purchase a business, the price is between 1 and 3 years of profits. The P/E ratio that is above 3 is overpriced according to the rules of thumb for all other businesses. Stock Markets are a PYRAMID SCHEME with added bells and whistles. The Dow Jones Industrial Average WILL NOT GO UP IF MORE INVESTORS DO NOT INVEST!

- Monday December 08, 2008 05:20PM EST

The greed bubble has burst!Corporations, and rich run the world. Everytime we have a merger the working man person gets paid less or losses there job. Greed from Corporations,Hedge Funds,Cox that got rid of the no tick rule last year all had a part of our collapse.Everytime a Corporation merges the little guy looses his job,gets paid less,so the rich can get richer.Most people live on credit which the banks love.how many trillions are we in the hole?The stock market is just a game that hurts alot small people.All these mergers have created a monoply,Wal Mart,about 4 major banks ect.

- Monday December 08, 2008 05:20PM EST

yeah fast money boyos...you lost "fast" too just like the rest (on your AAPL call at 125, or your Brazil plays( its always a stock pickers market... you guys starting your own hedge funds?...aka thx for the mention of div stocks as counter to traders market ieL buy and hold

Yahoo! Finance User
Yahoo! Finance User - Monday December 08, 2008 05:22PM EST

In response to an earlier post: Stock market losses/gains are NOT locked at the end of the day when the market closes. If I buy a stock today at $1/share, and sell it in 10 years for $10/share, I make a profit of $9/share, no matter the volatility in between. Of course, that money might be actually worth less due to inflation, but I still got $10/share when I sold it. Those shares were NOT constantly bought and sold on a daily basis! Just because today's price is low, doesn't mean that you've automatically lost the money! You only "lock in" gains/losses the day you actually sell the stock. The stock shares in your account are NOT sold off every day, unless you actively do this (or direct your broker to do this, against his/her advice I'm sure)! "Buy and hold" as a long-term investment strategy does assume that the market will keep going up over time, as it has throughout history, even when you factor in the various booms and recessions/depressions. If the market rules (official or otherwise) change enough that this pattern is not a valid predictor, then (and only then) should the long-term investor change strategies. Nothing is a sure thing, there are risks to every investment (including stocks, bonds, real estate, commodities, etc.). If you are not comfortable putting your money in stocks, then invest in something else, it's your money! The educated investor is aware of the options, risks, and rewards, and acts accordingly. I will not retire for nearly 30 years (if ever!), so the majority of my portfolio is indeed stocks. As the years go by, I will gradually shift my investments to less risky ones so that a wild market swing like the current one will not have as much as an effect on my portfolio's value. Of course, if the rules change along the way, I'll get more information, more advice, and act accordingly. It's my money and my risk, so it's my decision! I am not a financial advisor, just an educated consumer. As always, do what you want with your money, and don't blindly follow my advice (or anyone else's); get educated!

Yahoo! Finance User
Yahoo! Finance User - Monday December 08, 2008 05:22PM EST

Do your homework and buy businesses at fair prices...don't listen to these guys.

- Monday December 08, 2008 05:25PM EST

The world is full of "Chicken Littles." they've forgotten the adage "Buy low, sell High." Rather than instill confidence in the market, they poor out gloom and doom. Stick a fork in them and turn them over, they're done.

- Monday December 08, 2008 05:25PM EST

And, why did the government/taxpayer bail out these yahoos? If the stock market has been reduced to a casino, then, should anyone put in a portion of their income for retirement?

- Monday December 08, 2008 05:26PM EST

In my opinion, hedge funds and short-selling should be banned. If you don't own a stock you can't sell it. Period. It's kind of like me selling my neighbors house out from under him (even though I don't own it), and then when he's been evicted, I buy buy it back at a lower price and pocket the difference. It's these kinds of traders that LOVE market instability because they can shake fearful individual investors out of the market with massive short sales, and then profit from that fear by buying back stocks later. I say lets linch em!

Yahoo! Finance User
Yahoo! Finance User - Monday December 08, 2008 05:29PM EST

"He prefers more stable companies with easily understandable balance sheets like McDonald's. But, again, just for a trade." Why would someone care about the balance sheet if it's "just for the trade" ??

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