Buy and Hold

I hear all the time people trumpeting that "buy and hold" is dead. They hold out the fact that if you had bought the S&P 500 on January 1st 2000 and he'd for the next decade, you would have lost over twenty percent.  Of course they do not tell you that if you bought on 12/7/2002 and held until today (a different ten year stretch), you would be up a respectable 60% (and I suspect that is before dividends).

So yeah, if you buy at a very high price and hold, you are not assured of a gain in the next ten years, but if you buy at a lower point or some sort of dollar averaging, you can still do ok with plain vanilla buy and hold.

My dividend portfolio is supposed to be quasi buy and hold. I have traded it a bit more than I first envisioned, but the core has stayed pretty steady. A true buy and hold for me is the college portfolios for my two youngest kids.  I have been managing it directly with individual stocks since 2009. I buy three stocks each year, with the intent of holding until they go to college (another three/five years).

As these are college funds for my kids, I am quite selective on what stocks I buy and I give it a great deal of thought.  So far, I have knocked the cover off the ball (perhaps they will thank me sme day).

January 2009: +134%
January 2010: + 64%
January 2011: + 32%
January 2012: +16%
October 2012: + 11%

So each tranche has performed very very well. I have stuck with quality household names like Ace and Chubb. I will add another tranche early in 2013. I will try and let you know what I pick.