By: Adrian Mastracci
North Shore News
Business Section, “Loose Change”
Sunday, February 22, 2004
Have you ever had a sandwich without the meat? I definitely prefer some in my sandwich – no question about it.
There is no doubt that some breads are very tasty. However, a sandwich of just two lonely slices does not sound terribly inspiring.
I got to thinking that the same point applies to the ever popular “buy and hold” investment strategy – the one that is both cherished and thrashed daily by many experts all around the world.
Well, that is exactly what is lacking with just buy and hold. It has no MEAT. It’s like having a void in the middle; you could say uninspiring.
You see, the buying and holding are only part of total investment strategy. Moreover, nowhere in the commandments of investing is it written that holding means forever.
Therefore, just buying and holding does not satisfy my investment appetite. Let me elaborate.
Successful investing goes much further than simply buy and hold. My experience shows that it improves immensely when it’s beefed up with a serving of MEAT. A little thinking outside the box.
Allow me to describe the tasty MEAT recipe for the investing sandwich:
| M |
Monitor the selected portfolio holdings periodically. |
| E |
Examine the reasons why you still hold them vis-à-vis your goals. |
| A |
Assess the suitability of their prospects going forward. |
| T |
Take swift action as necessary and don’t look back. |
Investors can adopt any appropriate investment strategy and modify it as often as they wish. However, at some point they begin negotiating how short their long term really is.
Day traders often think in terms of hours. Warren Buffet thinks more in terms of a lifetime.
Actually, day traders know a great deal about MEAT. They breathe it and make decisions based on it practically every trading day.
It does not matter whether investors focus on asset allocation, market timing or picking undervalued superior stocks. Adding some MEAT to the investing sandwich benefits all investment strategies.
A major stumbling block for many investors is dealing with the investments heading south. Sadly, making portfolio selections is not about being right every time.
Acquiring the skills of investing involves coming to grips with being wrong. And it will happen.
Yes, folding the tent on investments whose high hopes are dashed is mighty distasteful. Even for professionals.
Yet, those who have mastered the art know what a positive affect a little MEAT can have on portfolio success. Think of Nortel, 360 Networks, JDS Uniphase, Lucent or WorldCom.
On the other hand, engaging in the MEAT exercise may reconfirm that your selections are still a valid part of your investment journey. That’s a reassuring find.
Investors can embrace whichever investment strategy works for them. Adding some MEAT to their version of buying and holding makes it the superior strategy. Now that’s investing savvyness.
One approach definitely worth adopting. Regardless of whether the holding period is tallied in hours, days, months, years or even decades.
Is it time to beef up your investment sandwich? A little MEAT can go a long way.
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