Tag Archives: buy and hold

TAA vs buy and hold in overvalued markets

US stocks are expensive. There seems to be article after article on the expensiveness of US stocks these days. Plus, bonds in general are really really expensive. Both US stocks and all bonds are in the top (90th+ percentile) tiers of expensiveness relative to history. As Cliff Asness of AQR points out, the problem is that they are both at these expensive levels at the same time, which hasn’t happened ever. That means that a portfolio of US stocks and bonds (50/50, 60/40, take your pick) has a very¬†low expected return going forward. Maybe the lowest ever. OK. Now what? … Continue reading

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Tips for trading ETFs in TAA portfolios

I get a lot of questions about the mechanics of buying and selling the ETFs that comprise the tactical asset allocation (TAA) portfolios that I discuss on the blog. In this post I’ll address some common concerns and issues with respect to ETFs and share some tips for trading them in TAA portfolios. When implementing buy and hold portfolios with ETFs the predominant concern is the management fee of the ETF, especially with an infrequent rebalancing approach. For example, with an annual rebalancing methodology at most there would be one trade per ETF per year. Other common trading concerns such … Continue reading

Posted in Portfolio, TAA Investing | Tagged , , , , , , , , | 7 Comments

The biggest lie in finance – buy and hold

There are lots of lies in finance or more subtly put, a lot of things wrong with conventional wisdom. I have trouble deciding which lie is the biggest but definitely one of the candidates is ‘Stocks for the Long Run’ which usually means that buying and holding the market index is the best way to generate wealth over the long term. Basically, this lie is made of two parts; that buy and hold is a superior investment strategy over the long term and that passive investing is also superior over the long term. The problem is that these are true … Continue reading

Posted in Portfolio, Retirement | Tagged , , , , | 4 Comments