By Alan Steel

American author Jodi Picoult once wrote that anxiety is like a rocking chair: It gives you something to do, but it doesn’t get you very far.

True enough, eh? And I’m reminded of this as I watch the surf break here in Tenerife – as removed from the day to day noise as a holy man in a temple – about how trying to control those things over which you have none is a bit like trying to steer a river.

Sure, you can sit around and rock yourself into an emotional foetal position while worrying about your investments (better to find someone to worry about them for you), and believing that the world is rattled, the markets have pinnacled, Donald John Trump is an economic malignancy, and when the scientific community will finally reinstate Pluto as a planet…

The problem is that all those things won’t do you a whole lot of good. A long-term perspective will. But the once vaunted 1980s and 1990s investment position called “buy and hold” has, after two recessions in the same decade, become a daunting proposition.

And yet that’s exactly where your focus should be. 

In simplest terms, buy and hold means that you make a plan, you invest for the long-term to achieve the objectives you’ve set out in it, and then you leave it alone (like Warren Buffett).

And in those intervening years you’re probably better off tuning into the Discovery Channel each night instead of that squeaking rocking chair known as “The Bad Noise at 10.” 

Now, the idea of buying and holding your investments isn’t very fashionable at the moment. And that conclusion by the investor herd is as strange as it is predictable. 

Sure, you can sit around and rock yourself into an emotional foetal position while worrying about your investments (better to find someone to worry about them for you), and believing that the world is rattled, the markets have pinnacled, Donald John Trump is an economic malignancy, and when the scientific community will finally reinstate Pluto as a planet…

The recent end of a 35-year secular bull in the bond market, and the on-going 13,000 point rise over eight years in the Dow Jones would make you think that even the masses would have stopped and taken notice.

Nope.

And it’s a lesson that keeps on repeating itself time and again; if in doubt do the opposite of what the majority of investors are doing; all those bond funds, ETFs, Index Trackers, cash ISAs, Absolute Return Funds…what’s popular is rarely profitable. 

And the long-term is a very underappreciated view.

Consider the words of Wade Slome from the Investing Caffeine blog, who writes:

“This is not the first time that Buy & Hold (B&H) has been held for dead. For example, BusinessWeek ran an article in August 1979 entitled The Death of Equities (see Magazine Cover article), which aimed to eradicate any stock market believers off the face of the planet. Sure enough, just a few years later, the market went on to advance on one of the greatest, if not the greatest, multi-decade bull market run in history. People repudiated themselves from B&H back then, and while B&H was in vogue during the 1980s and 1990s it is back to becoming the whipping boy today.”

Alan here – Well, I’m off to the beach, folks.

Get some advice and step away from the noise.

Unless it’s the sound of the surf.

Alan Steel, Chairman, Alan Steel Asset Management

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