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But and hold has been corrupted into HODL, and cryptocoins enthusiasts / meme stonks will wreck people because of it. Buy a stock so that you keep holding it f

But and hold has been corrupted into HODL, and cryptocoins enthusiasts / meme stonks will wreck people because of it. Buy a stock so that you keep holding it for 10 years is good advice, but not in the context of today's mania. It's advice that is supposed to mean 'buy safe things', not 'buy that thing with exponential growth that might be worth 1000x it's current value in 10 years. I do think that blogs / advice like what this post does is overall a good idea and good advice. But I find it difficult to discuss in practice due to the HODL corruption.

colechristensen 4y ago
Just don’t buy popular memes as long term investments.
- smcn 4y ago
  I'd go even further, I don't think you should hold meme stocks longer than a day. You can always buy in the next day but momentum can swing way too much and kill any profit you made. For example: BBBY when it was revealed that Ryan Cohen sold his shares. Instant drop.
SamBam 4y ago
I saw the headline and my mind went to HODL as well, but the article itself is definitely about modest, safe investments, not "diamond hands" and moon-shots.
- dragontamer 4y ago
  I agree. Its a good article in isolation. My main problem is that HODL is a pretty common mindset, based on random discussions I have on the street / with people in general. You know, the types who lose 60% on ARKK but they're sure that they're going to "make it back" over the next few years? Or the people who think that losing 60% on ARKK is similar to losing 15% in VTI / SPY? (For those who don't realize, starting with $100k, you end with ~$40k if you had ARKK, but $85k if you held onto VTI/SPY. Aka, those who held VTI/SPY have twice your money now relatively speaking). Unrealized losses _are_ losses. People must recognize this. People are corrupting the buy-and-hold advice to mean "ignore the unrealized losses" or "if you don't sell its not a loss", which is bullshit.
  - jxramos 4y ago
    I realized in the recent past that another part of the picture that may be missing for the HOLDers is that the losses can be initiated by other parties. That is to say if someone liquidates a company and it gets bought for $X which is some fraction of the share price the HOLDeler paid, then they will be forced into taking loses. That third party factor adds a whole other dimension to the risk of holding indefinitely, because there is no such thing as an indefinite runway in the market, someone can put an end to a company at any point in time just like we saw with TWTR recently.
thunky 4y ago
> Buy a stock so that you keep holding it for 10 years is good advice Not really. Individual stocks are too risky for casual investors. Buy and hold the entire market instead.
- andsoitis 4y ago
  Or even just the top 500. Now if only there was an easy and convenient neat to do that…
  - pooper 4y ago
    I have close to zero financial knowledge but even I r managed to fund a Vanguard Roth IRA in my name. If I can do it, anyone can do it. It isn't ideal. It is 100% VTSAX. But I did it. All on my own. No need to worry about a target date or anything like that.
    - andsoitis 4y ago
      Yes. I was being tongue in cheek.
- Mistletoe 4y ago
  That’s my major beef with this guy’s article. It has been shown repeatedly that picking stocks does not work. https://www.cnbc.com/amp/2020/09/18/stock-picking-has-a-terrible-track-record-and-its-getting-worse.html https://www.cnbc.com/amp/2020/09/18/stock-picking-has-a-terr... Choosing Airbnb or Google or whatever because you think you know something about it or can predict the future is setting yourself up for failure. Yahoo seemed like a great stock at one time. The market changed, the leadership was faulty etc. >The top five stocks in 2000 were Microsoft, Cisco (CSCO), Exxon Mobil (XOM), GE (GE), and Intel (INTC); they represented 18% of the index. Five years later, Goldman pointed out, they represented just 12% of the index’s market capitalization. And 20 years later, they represent 8%.
  - motoxpro 4y ago
    From the article. "To be perfectly clear, I am not recommending Airbnb or Google stock here. I like both companies very much and think they are dominant in their sectors (travel and search) and likely will continue that dominance for the foreseeable future. But all businesses are at risk of poor management, new competitors, changing market structures and technologies, and many other things. Return comes with risks. Buildings can be risky too. Neighborhoods can change. Tax and other laws can change."
jonathanlb 4y ago
One aspect of the buy and hold mentality I feel is missing from the discussion is direct registering (DRS) the shares you invest in a company. The shares you buy through a broker-dealer are held in "street name" meaning they are registered with your broker-dealer. You enjoy beneficial ownership, meaning you enjoy the benefits of ownership even though the title to the shares are in your broker's name. You have IOU's, basically. Because the shares aren't in your name, broker-dealers can lend them out to hedge funds shorting the company you're investing in. The shares can also vanish if the brokerage goes under. DRSing your shares at the company's transfer agent ensures that the shares are registered under your name (and not the brokerage's), and prevents your shares from being lent out and being used against your investment.
- sigstoat 4y ago
  > Because the shares aren't in your name, broker-dealers can lend them out to hedge funds shorting the company you're investing in. This is part of how they absorb the fees inherent in trading. Or you can use a brokerage which pays you part of what is made for the loaning-out, and doesn't absorb the trading fees. Or just don't worry about it, your chump-change investments being lent out doesn't matter. > The shares can also vanish if the brokerage goes under. https://www.investopedia.com/terms/s/sipc.asp https://www.investopedia.com/terms/s/sipc.asp Your brokerage firm made you agree to a bunch of documents explaining their SIPC insurance, where the assets will be transferred if they go under, etc, etc. It's not their fault if you just clicked through and ignored them. Stick with the various major brokers and expend your effort worrying about lightning strikes and sharknados.
  - jonathanlb 4y ago
    > your chump-change investments being lent out doesn't matter. Who is to say my investments are chump-change? What's with the derision? I'm under no obligation to help broker-dealers make money off of lending out my shares, especially if those shares are being used to short the companies I'm invested in. If retail investors DRS'd more of their long-term holdings, it absolutely would matter and have an effect on shares available to hedge funds to short.
shapefrog 4y ago
Buy a stock so that you keep holding it for 10 years is good advice, it is also good advice in todays environment. Buy a stock so that you keep holding it for 10 years even if they pivot from computer repairs (because you think computers are going to be a thing) to bitcoin, to burning piles of cash because you joined the cult led by the CEO is a terrible idea.

colechristensen 4y ago

Just don’t buy popular memes as long term investments.

smcn 4y ago
I'd go even further, I don't think you should hold meme stocks longer than a day. You can always buy in the next day but momentum can swing way too much and kill any profit you made. For example: BBBY when it was revealed that Ryan Cohen sold his shares. Instant drop.

SamBam 4y ago

I saw the headline and my mind went to HODL as well, but the article itself is definitely about modest, safe investments, not "diamond hands" and moon-shots.

dragontamer 4y ago
I agree. Its a good article in isolation. My main problem is that HODL is a pretty common mindset, based on random discussions I have on the street / with people in general. You know, the types who lose 60% on ARKK but they're sure that they're going to "make it back" over the next few years? Or the people who think that losing 60% on ARKK is similar to losing 15% in VTI / SPY? (For those who don't realize, starting with $100k, you end with ~$40k if you had ARKK, but $85k if you held onto VTI/SPY. Aka, those who held VTI/SPY have twice your money now relatively speaking). Unrealized losses _are_ losses. People must recognize this. People are corrupting the buy-and-hold advice to mean "ignore the unrealized losses" or "if you don't sell its not a loss", which is bullshit.
- jxramos 4y ago
  I realized in the recent past that another part of the picture that may be missing for the HOLDers is that the losses can be initiated by other parties. That is to say if someone liquidates a company and it gets bought for $X which is some fraction of the share price the HOLDeler paid, then they will be forced into taking loses. That third party factor adds a whole other dimension to the risk of holding indefinitely, because there is no such thing as an indefinite runway in the market, someone can put an end to a company at any point in time just like we saw with TWTR recently.

thunky 4y ago

> Buy a stock so that you keep holding it for 10 years is good advice Not really. Individual stocks are too risky for casual investors. Buy and hold the entire market instead.

andsoitis 4y ago
Or even just the top 500. Now if only there was an easy and convenient neat to do that…
- pooper 4y ago
  I have close to zero financial knowledge but even I r managed to fund a Vanguard Roth IRA in my name. If I can do it, anyone can do it. It isn't ideal. It is 100% VTSAX. But I did it. All on my own. No need to worry about a target date or anything like that.
  - andsoitis 4y ago
    Yes. I was being tongue in cheek.
Mistletoe 4y ago
That’s my major beef with this guy’s article. It has been shown repeatedly that picking stocks does not work. https://www.cnbc.com/amp/2020/09/18/stock-picking-has-a-terrible-track-record-and-its-getting-worse.html https://www.cnbc.com/amp/2020/09/18/stock-picking-has-a-terr... Choosing Airbnb or Google or whatever because you think you know something about it or can predict the future is setting yourself up for failure. Yahoo seemed like a great stock at one time. The market changed, the leadership was faulty etc. >The top five stocks in 2000 were Microsoft, Cisco (CSCO), Exxon Mobil (XOM), GE (GE), and Intel (INTC); they represented 18% of the index. Five years later, Goldman pointed out, they represented just 12% of the index’s market capitalization. And 20 years later, they represent 8%.
- motoxpro 4y ago
  From the article. "To be perfectly clear, I am not recommending Airbnb or Google stock here. I like both companies very much and think they are dominant in their sectors (travel and search) and likely will continue that dominance for the foreseeable future. But all businesses are at risk of poor management, new competitors, changing market structures and technologies, and many other things. Return comes with risks. Buildings can be risky too. Neighborhoods can change. Tax and other laws can change."

jonathanlb 4y ago

One aspect of the buy and hold mentality I feel is missing from the discussion is direct registering (DRS) the shares you invest in a company. The shares you buy through a broker-dealer are held in "street name" meaning they are registered with your broker-dealer. You enjoy beneficial ownership, meaning you enjoy the benefits of ownership even though the title to the shares are in your broker's name. You have IOU's, basically. Because the shares aren't in your name, broker-dealers can lend them out to hedge funds shorting the company you're investing in. The shares can also vanish if the brokerage goes under. DRSing your shares at the company's transfer agent ensures that the shares are registered under your name (and not the brokerage's), and prevents your shares from being lent out and being used against your investment.

sigstoat 4y ago
> Because the shares aren't in your name, broker-dealers can lend them out to hedge funds shorting the company you're investing in. This is part of how they absorb the fees inherent in trading. Or you can use a brokerage which pays you part of what is made for the loaning-out, and doesn't absorb the trading fees. Or just don't worry about it, your chump-change investments being lent out doesn't matter. > The shares can also vanish if the brokerage goes under. https://www.investopedia.com/terms/s/sipc.asp https://www.investopedia.com/terms/s/sipc.asp Your brokerage firm made you agree to a bunch of documents explaining their SIPC insurance, where the assets will be transferred if they go under, etc, etc. It's not their fault if you just clicked through and ignored them. Stick with the various major brokers and expend your effort worrying about lightning strikes and sharknados.
- jonathanlb 4y ago
  > your chump-change investments being lent out doesn't matter. Who is to say my investments are chump-change? What's with the derision? I'm under no obligation to help broker-dealers make money off of lending out my shares, especially if those shares are being used to short the companies I'm invested in. If retail investors DRS'd more of their long-term holdings, it absolutely would matter and have an effect on shares available to hedge funds to short.

shapefrog 4y ago

Buy a stock so that you keep holding it for 10 years is good advice, it is also good advice in todays environment. Buy a stock so that you keep holding it for 10 years even if they pivot from computer repairs (because you think computers are going to be a thing) to bitcoin, to burning piles of cash because you joined the cult led by the CEO is a terrible idea.