..well, this has been what this thread has been trying to tell you all this time.
..yes, Buy & Hold is also very different from Buy & Hope
..and mind you this is based on the performance of the indices, many individual stocks have fared worse (as are some that have done better too).
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By Puru Saxena
"Buy & Hold" or "Buy & Hope"?
The post-2013 US secular bull market has convinced market participants that "buy & hold" works all the time...the reality is very different!
History shows that all major regions + stock markets have undergone secular bear-markets with entire indices not making any progress for 10/20/30 years! Here are some examples of secular bear-markets*
(i) US -- 1968-1982 (14 yrs); 2000-2013 (13 yrs)
(ii) Germany -- 2000-2013 (13 yrs)
(iii) France -- 2000-2023 (23 yrs)
(iv) UK -- 2000-2021 (21 yrs)
(v) Australia -- 2007-2022 (15 yrs)
(vi) Brazil -- 2008-2018 (10 yrs)
(vii) Hong Kong -- 2007-2024 (17 yrs)
(viii) China - 2007-2024 (17 yrs)
(ix) Russia - 2007-2024 (17 yrs)
(x) Singapore - 2007-2024 (17 yrs)
(xi) South Korea - 2007-2022 (15 yrs)
(xii) Spain - 2000-2024 (24 yrs)
(xiii) Taiwan - 2000-2020 (20 yrs)
(xiv) Japan - 1989-2024 (35 years)
*Some of these secular bear-markets are still running and many of the above indices are still in a drawdown/haven't yet surpassed their previous ATH!
Unfortunately, it is impossible to predict when a secular bear-market will start in the US but when it does, "buy & hold" will cause severe stress and financial pain.
A risk management strategy (such as hedging or raising cash) is essential to reduce drawdowns/volatility and smooth out the equity curve. Hedging may seem like an unnecessary endeavour during the ongoing secular bull-market in the US but those of us who experienced 2000-2013 first hand remember well that back then, even today's stock market darlings declined by 60/70/80% and didn't make any progress for 13 years!
A "buy & hold" approach may be appropriate for a person who is incredibly wealthy and doesn't care about large portfolio drawdowns/lack of progress for 10+ years or someone who is very young and just starting out on his/her investing journey with a dollar-cost-averaging plan for the next 20 years.
On the other hand, a case can be made that "buy & hold" involves a high degree of risk and uncertainty for those who are relying on their investment portfolio and/or are not in a position to dollar-cost-average for the next 10-20 years.
