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Don’t even think of owning stocks unless you’re willing to buy and hold for at least 10 years

edited May 20 in Fund Discussions

Opinion: Don’t even think of owning stocks unless you’re willing to buy and hold for at least 10 years
M.Hulbert article

If you want a 95% probability of stocks outperforming bonds, you better plan on 20 years....

Imho maybe 3-10 yrs may see reasonable gains, but if hold on 20 yrs, may even be better...maybe ???++450s% by the time you are done [hopeful speculative thinking]


  • My long-long term portfolio has several stock positions that haven't done anything but reinvest for over 20 years. Boring is beautiful when it comes to long-term wealth accumulation.

    My more active portfolio has a few like that, but I tend to trade a bit more in that account, as i did earlier this year.
  • edited May 20
    Hi @_rforno, how is your total accumulative return do over past 20 yrs, upwards of >350% totals?...thx kind regards
  • edited May 20
    @JohnN and @davidrmoran - Thanks for posting this. While I may disagree with the writer’s conclusions, the underlying topic being discussed is of value to most investors.

    Just a quick read suggests this article is mostly gibberish. I agree overall that investing in risk markets should be done only with a 10-year or longer time horizon in mind. That’s because trends (both up and down) can persist for very long periods. Risk assets generally include stocks, real estate, distressed debt, commodities and longer dated investment grade bonds (which are highly sensitive to changes in prevailing interest rates).

    With the above aside, there are some problems with his supporting data, conclusions and logical (illogical?) extensions. Any “back testing” of bond returns needs to be taken with a large grain of salt. When have interest rates been so low? When, if ever, has the Federal Reserve engaged in such a massive and long lasting effort to keep interest rates low while pumping trillions of dollars into the economy (and markets)? This unprecedented effort dates back at least to late 2007 and - some would argue - back to Greenspan days. Volumes have now been written about the distortions arising from this prolonged low rate period. Also note that yields on investment grade / government bonds have been trending lower for the past 30 years (resulting in higher and higher bond prices).

    At this point, I can’t agree that investment grade longer duration bonds are “safer” for most investors than other risk assets. And, if dealing with this question in your portfolio, be sure to take into consideration that you very likely own more bonds than you think owing to those held by your balanced and allocation funds. I do still find value in bonds, even at today’s extremely low rates, as a “hedge” within a more diversified portfolio. Think of bond investments as “insurance”. The trifling return on them, if any, (and potential loss) is the cost / penalty you pay for “insurance” against widespread equity depreciation should the U.S. and global economies slide into a deep prolonged recession. I’m not predicting that. However, we typically carry insurance against things we don’t expect to happen. And if you’re a “portfolio watcher” as many of us are, those bond holdings will tend to smooth out your short term volatility and help you maintain your sanity.

    As an aside here ... a 10 year government bond purchased today and held to maturity will net you somewhere, I suspect, between 0.35% and 0.75% annually over that period - depending on fees and associated costs of ownership. On any given day an investment in the broader equity markets has a pretty good chance of returning more back to you than the bond would over a full year. Are investment grade long-dated bonds a “good” investment? I submit the answer is No. Can they be a useful hedging tool? Yes - in moderation,

    Disclosure - Funds that invest substantially in intermediate / longer duration bonds and which I own: DODLX, RPSIX, PBDIX
  • edited May 20
    johnN said:

    Hi @_rforno, how is your total accumulative return do over past 20 yrs, upwards of >350% totals?...thx kind regards

    I've not calculated it, nor am I interested in comparing my performance to any industry benchmark, because I don't care about benchmark comparisons or beating them. However, according to my own measures -- namely, seeing acceptable levels of wealth growth/accumulation in a relatively stress-free way that lets me sleep well at night -- I am doing quite well and am *more* than set up and/or well-on track for a comfortable retirement in practically all but the worst-case scenarios. In other words, I am thankful for where I am.

  • (the Ted in me points out that I posted this yesterday)
  • Stop it! Stop it right now before it spreads.
  • har, no one noticed my addendum posting, so much the better this dire piece has attention here
  • edited May 20
    Just to let everyone know ... I’ve gone back and edited my earlier post to include acknowledgement that both @JohnN @davidrmoran posted this same article. Hope everybody is happy now.
  • thx...Dr davidrmoran posted it earlier..thx
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