Unless you can watch your stock holding decline by 50% without becoming panic-stricke

Discussion in 'Psychology' started by crgarcia, Nov 1, 2008.

  1. you should not be in the stock market.

    Warren Buffett
  2. 1) Buffett doesn't have an exit strategy, except for maybe.....his own death.

    2) If Buffett were just starting out and had a 50% drawdown, he'd be out of the business forever. He was "lucky" to get off to a good start before he had a large fluctuation in BRKA.
  3. He is greedy when others are fearful, and fearful when others are greedy.

    He has stated the "no strike called" baseball analogy.

    He has actually waited in cash, when stocks become too overvalued.
  4. Buffet is a towering figure in this field, however he benefited greatly from US corporate dominance in the 20th century. I don't think there will be another buffet unless a country by some chance gets into the same position US did post WWII
  5. don't know when buffett made his statement but it's redundant and has been since
    1982 when stock index futures were introduced - the buy-and-hold method was
    killed at that time, and while i don't care about the 'professionals', i'm sorry for the
    majority of the public who're sold and re-sold over and over again the myth of b-a-h
    and lose so much of their hard earned money because of it
  6. dancalio


    I'm one of those people who has been indoctrinated in the buy and hold idea. But recently I have had my eyes open to new ideas.

    Could you elaborate on what you mean by saying that stock index futures killed buy and hold? Is it something to do with matching the market upside while limiting downside?

  7. dancalio: afraid i may have overstated things

    i'm a single bet short term trader of the es mini or any other futures, betting on the up-
    down of price moves. the idea i'd allow my bet to go against me by 50% is rediculous

    index futures and options on index futures provide the means to hedge or insure one's
    stock portfolio against a falling market, as well, sell short, trade the downside without
    commission costs of exiting and re-entering stock trades, trading rather than b-a-h
    the site of the inventor of financial futures: http://www.leomelamed.com/index.html

    what's the psychological effect to the individual when seemingly the only trading method
    - philosophy - is to buy, and hold ? currently they won't open the mail from their broker

    all funds depend on retaining clients' money in order to charge the monthly management
    fee - b-a-h . the whole consumer financial industry promulgates b-a-h in order to support
    their profits - not the clients, but brokers would make more money by actively advising
    clients when to get out of the market including funds and later, re-enter
    unfortunately the public relegates their financial/money manangement to others and
    believes all they need do is put their money into a fund - b-a-h and if they wait for a
    sufficient period of time - b-a-h, they will have more money at the end of that period

    each individual, family is likely to live thru one or two economic downturns that financially
    affect them directly including job loss and may, as is currently happening, hit the soon-
    to-be retired and retired very hard. so the individual and family must take responsibility
    to know when to have 'their future prosperity, retirement' in the market and out of the
    market - it's the pros who trading the markets create the ups and downs

    the individual and family must learn to trade the markets as the pros do
    in order to ensure 'their future prosperity, retirement'
  8. Buy and hold is dead?

    That's funny. Buy and hold - in a Buffet sense - means buying a stake in a company and becoming part owner of the business.

    Fortunes are made (and lost) buying businesses. Not sure how that will ever go away.
  9. yes, as said i overstated things. b-a-h also applies to those who
    are looking for dividend payments however few have the capital
    available to buffett and in the context of his statement, it's a loser's game
  10. People are also not taking into account Buffet's own extraordinary skill at picking out value. Some articles make it sound like that with a little frugality and common sense anyone can replicate Buffet's success.
    #10     Nov 16, 2008