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Reports of 'Buy and Hold's' Death Greatly Exaggerated, Says Schwab CIO

Posted Nov 04, 2009 10:02am EST by Peter Gorenstein in Investing, Banking

Buy and hold. Depending on whom you speak to it's either a tried and true strategy to live by or a relic of the pre-crash days.

Jeff Mortimer, chief investment officer of Charles Schwab Investment Management, is still one of the faithful.  In fact, the more investors' turn away from 'buy and hold' the more he believes in it.  Mortimer says doing the "opposite of what everyone else is doing" has always been a winning strategy in his career.

Mortimer’s not opposed, "if you want to trade around the edges" with a small portion of your portfolio, but warns trading in and out of the market is a sucker's game for most.

Which stocks are worth owning in this environment?

One area he favors is the materials sector, saying it "should continue" to lead any recovery, and still sees value in steel stocks.  Also, instead of worrying about the rising price of oil, he calls it a bullish indicator.  "The price of oil is clearly showing to us worldwide demand for a commodity," he observes.

He's also still recommending tech stocks like IBM and financials, another key sector that's lead this year's bull run.  Among his favorites in this category is JP Morgan Chase, a stock he calls a long-term winner.

73 Comments

Yahoo! Finance User
Yahoo! Finance User - Wednesday November 04, 2009 10:07AM EST

Buy and Hold was never alive! 1990s happed once in 300 centuries! Look at this chart: http://www.tradingstocks.net/html/stock_market.html

Terry
Terry - Wednesday November 04, 2009 10:10AM EST

The system is broken and most are broke so why gamble in a manipulated system that bails out the connected at the expense of the little investor. The solution is to clean house in Congress where the fault lies for the crisis. The financial industry has lost your money they had you bail them out and the government is printing money 24/7 and they will send you the bill in 2010-2011 of course after the elections. GET SMART... No Senator should be in office more than 2 terms (12 years) and no Congressmen/women should be in office more than 3 terms (6 years) otherwise they do too much harm to us all. VOTE OUT the INCUMBENTS in 2010...

Helga
Helga - Wednesday November 04, 2009 10:12AM EST

Listen to Mortimer. Mortimer talks. I trust him. I trust experts. I'm sexy.

san
san - Wednesday November 04, 2009 10:14AM EST

Buy and hold is dead! See Nasdaq since 2000, see Nikkie since 1990. A $1000 in 2000 was worth more than $1000 today because they keep printing the stuff at an ever greater rate.

Mark
Mark - Wednesday November 04, 2009 10:15AM EST

Stop listening to the masses and just follow the trend: www.originalturtletrader.com

charm
charm - Wednesday November 04, 2009 10:15AM EST

hi gud eve

Mike
Mike - Wednesday November 04, 2009 10:17AM EST

I think the question for today is am i better to put my money against my debt or in investments. With the dow/oil ratio so low my thought is paying off debt is the better call. Wait for the ratio to go higher before investing.

Yahoo! Finance User
Yahoo! Finance User - Wednesday November 04, 2009 10:23AM EST

Buy and Hold old like mold.. Buy and Sell works like h....

Yahoo! Finance User
Yahoo! Finance User - Wednesday November 04, 2009 10:23AM EST

I'm not sure he is doing the opposite of what everyone else is doing. In fact he is simply doing what everyone else is doing. Buy and hold is a fabulous strategy for a perpetually increasing stock market. Markets do not behave in this fashion. A longer time horizon is required. Visit http://www.TheSentinel.biz and read our long-term market forecast.

donfurio
donfurio - Wednesday November 04, 2009 10:25AM EST

the TT losers won't like this guy! How's that sucker's rally Task? hahahhaa,

donfurio
donfurio - Wednesday November 04, 2009 10:27AM EST

Buy and hold is dead! See Nasdaq since 2000, see Nikkie since 1990. A $1000 in 2000 was worth more than $1000 today because they keep printing the stuff at an ever greater rate.--------------------------------use the S&P 500 or an all world index, and add it money every year and see if you end up better than being in cash, over the long-term you def will and will have collected some nice div's along the way

Tups
Tups - Wednesday November 04, 2009 10:27AM EST

Where is Liz Saunders?? Is she single?? Anyway, I like his sector pick...buy materials...and sliver.

Helga
Helga - Wednesday November 04, 2009 10:32AM EST

Mortimer's body language says he doesn't believe what he is saying. But I trust Mortimer.

Tex
Tex - Wednesday November 04, 2009 10:33AM EST

I bought and held; didn't listen to the doom & gloomers. I'm down about 5% for the year. I am now re-balancing losses & gains for tax purposes. I want to beat the December rush. I expect to be even early next year and up 10% by end of 2010. Expect DOW 16000 by 2016.

Jed
Jed - Wednesday November 04, 2009 10:34AM EST

The 200 DMA is angled up right now. Jump on the bubble, hold with a 10% trailing stop. It worked for the DOT Bom bubble, it worked for the Bank Bubble and it worked for the oil bubble. It will work now.

Yahoo! Finance User
Yahoo! Finance User - Wednesday November 04, 2009 10:36AM EST

You guys above are right on track...Suckers Rallies don't last for long. GS and insiders are proping up this market up just for a trade. Buffet included. The fundamentals look bad going forward. Eastern Europe and a number of third world Nations are on the chopping block won't be able to pay back the European banks which are leveraged a lot worst than the US Banks due to weaker regs. Oil revenues will decline a lot further as green energy alternatives become in vogue. Look for higher interest rates and more defaults and bankruptcies like never before a double dip in equity markets and unemployment up to 20%. Also A.Cohen says the fundamentals are bad and a correction is in order soon for 20% decline. The 50 day moving averages on the Dow the will break down before Jan 1 2010. As the dollar recovers due to increased cost of funds due to inflation spiral commodities will take a big hit due to overspeculation ahead of itself across the world. Trade wars likely to emerge... Than real big wars that cost a lot more than the Trillion already sank in Iraq and Afghanistan.

Yahoo! Finance User
Yahoo! Finance User - Wednesday November 04, 2009 10:37AM EST

You guys above are right on track...Suckers Rallies don't last for long. GS and insiders are proping up this market up just for a trade. Buffet included. The fundamentals look bad going forward. Eastern Europe and a number of third world Nations are on the chopping block won't be able to pay back the European banks which are leveraged a lot worst than the US Banks due to weaker regs. Oil revenues will decline a lot further as green energy alternatives become in vogue. Look for higher interest rates and more defaults and bankruptcies like never before a double dip in equity markets and unemployment up to 20%. Also A.Cohen says the fundamentals are bad and a correction is in order soon for 20% decline. The 50 day moving averages on the Dow the will break down before Jan 1 2010. As the dollar recovers due to increased cost of funds due to inflation spiral commodities will take a big hit due to overspeculation ahead of itself across the world. Trade wars likely to emerge... Than real big wars that cost a lot more than the Trillion already sank in Iraq and Afghanistan.

Frank B
Frank B - Wednesday November 04, 2009 10:37AM EST

Buy and Hold NOTHING Have you looked at long term charts lately? The S&P 500 is back to its 1998 level. The NASDAQ and Dow are back to their 1999 levels! http://moneyfromthemarket.blogspot.com/2009/11/buy-and-hold-nothing.html

Frank B
Frank B - Wednesday November 04, 2009 10:37AM EST

Buy and Hold NOTHING Have you looked at long term charts lately? The S&P 500 is back to its 1998 level. The NASDAQ and Dow are back to their 1999 levels! http://moneyfromthemarket.blogspot.com/2009/11/buy-and-hold-nothing.html

Yahoo! Finance User
Yahoo! Finance User - Wednesday November 04, 2009 10:41AM EST

Buy and hold is gone. The new metrics and new standards of the market will not allow that. The money is made now in the short term hourly ups and downs with major money players (pension funds). The old market fundementals are completly upside down. The small investor is getting fleeced. American companies will continue to struggle into the near future and will not return much, until unemployment is put in check.

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