buy and hold strategy

Discussion in 'Strategy Development' started by Treve1, Jun 9, 2009.

  1. Treve1


    I would like to invest a part of my capital in a long term strategy for my retirement:

    I have found this:
    “On the 1st Oct you buy the worst 10 performing stocks of the S&P 500 over the last 3 years. Then come Sept 30ish the following year you sell and buy the next 10 worst of the last 3 years etc. Over the last 8 years it's generated 176% return per year.”

    Does anyone have experience with such a strategy? Any websites offering similar strategies or threads on this forum? I really have hard time to find information on this topic.

    More conservative approach would be: O'Higgins “Beating the Dow” or “The foolish four” This would generate about 20 % a year on average.

    Thank you!
  2. Similiar to the Dogs of the Dow theory of investing. Some of those worse performing stocks like Kodak did great the next year, but look where it is now. I don't know if buying the worse of a broad based index like the S&P 500 is such a good idea, but I think I'll look at the data.
  3. Treve1


    How do you look at the date? Where can find some more information about this kind of strategy? I am sure that there are many similar strategies, but I have no idea how to find them online.

  4. If you buy on Oct 1 and sell on Sept 30, you will have short term gains, better to wait until Nov 1 to sell so you have 13 months' holding period.
  5. You might read Marty Zweig or google seasonality indicators. There are some points on buy and holds during historical time frames.
  6. Well you can google dogs of the dow and go right to a dogs of the dow website that probably has everything laid out with historical data. It is also pretty easy to just look at the 30 stocks that make up the dow and see which ones have the poorest return for the year and buy the 10 worse. Same procedure for the S&P
  7. u21c3f6


    Dependent upon when someone may have started investing in dogs of the Dow, they may have invested in AIG, C and/or GM to name a few.

  8. Treve1


    Yes and according to in 2008 you would lose 45.4% investing in dogs of the dow and this year YTD is minus 16.8% already. But almost all the value and growth screens were in minus in 2008.

    Below is the performance of all the systems:

    In general I found the very interesting, but you can read the following on the site:

    “Keep in mind that the screens here are our own interpretations of the investment approaches advocated by numerous strategists. While we have attempted to illustrate a practical set of rules for each approach, the screens are only the first step. We recommend that you use them to generate an initial list of potential investments that merit further research. In addition, the monthly updates do not replicate a buy-and-hold strategy, which is the optimal approach for an individual investor.”

    Does anyone know any sites similar to providing growth and or value screens strategies like: Piotroski, Zweig, IBD Stable 70 just to name a few. At the same time, unlike the strategies would be updated every day and you would receive entry and exit signals? I think I might expect too much, and maybe such a service is not available.

  9. Reealjrd


    Buy and hold strategy hold more risk. There are couple of things which I observed for “buy and hold” investing. One thing which often gets quoted in favor of “buy and hold” is that it is not possible to time the market. Of course, I can’t pick tops and bottoms but one can’t surely pick a few up trends and avoid a few downtrends.
  10. Treve1


    Whereas it should not be a problem to filter out stocks for the dogs of the dow strategy, I would not know how to filter out the worst 10 performing stocks of the S&P 500 over the last 3 years. Can anybody recommend a simple toll doing this for me?

    Thank you!
    #10     Jun 13, 2009