A good article on the strategies that groups use to influence individuals on how to invest. Aivars Lode Avantce
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Why does anyone believe "buy and hold" works?
The mutual-fund industry, which has boomed since the 1980s, used a bunch of faulty academic research to "prove" you couldn't time the markets. Why would they promote the idea that you can't time the markets? Because they get paid based on assets under management. They need you to leave your money with them, good times or bad. No matter what, a mutual-fund manager isn't going to return your money and tell you, "Sorry, it's just not a good time to buy stocks…" So they have to invent a world where it is always a good time to buy stocks. You undoubtedly know their mantra: buy and hold. But it's all a lie. ----------Advertisement--------- The ultimate "app" A bidding war has broken out among the nation's biggest tech firms… Apple, Intel, Microsoft, and a host of others are throwing hundreds of millions of dollars toward a tiny group of tech stocks that are creating the "holy grail" of computer technology. Small-cap and technology expert Frank Curzio has spent months analyzing this burgeoning new trend, and he's recently identified one tiny firm that he believes will soon explode. To find out more, click here. --------------------------------- Please take a moment to look carefully at this chart… These are the daily closing prices of the Templeton Russian & East Europe mutual fund (TRF) over a 15-year period. This is one of the oldest and most established emerging-market mutual funds. This is the kind of fund people invest in heavily through 401(k) allocations. It is a closed-end fund. It trades like a corporation – like a regular, publicly listed stock. Sometimes it trades at a premium to its net assets and sometimes at a discount. That attracts traders and speculators. In this one investment vehicle, we have both sides of the investment world. Typical individual investors (lemmings, if you will) are dripping capital into this fund, month after month, regardless of the premium or discount and oblivious of critical factors in the marketplace. Meanwhile, the world's best investors follow this fund closely… waiting. They are like sharks. They know this is one of the most reliably volatile funds in the world… and one of the easiest to trade successfully. So in this one fund, you have a good litmus test to compare the two major philosophies of investing. Should you buy and hold? Should you pour capital into your 401(k) blindly each month? Or should you time the markets? Should you know the factors that lead funds like TRF to soar to absurd levels and then crash? Looking at this chart, you easily can see the fund peaked twice in 2006 – once in the spring and again at the end of 2006/beginning of 2007. Both of these times, TRF was trading at such an extremely high premium that we noticed it immediately. Here's exactly what we said at the time: It is a closed-end fund. It trades like a corporation – like a regular, publicly listed stock. Sometimes it trades at a premium to its net assets and sometimes at a discount. That attracts traders and speculators. In this one investment vehicle, we have both sides of the investment world. Typical individual investors (lemmings, if you will) are dripping capital into this fund, month after month, regardless of the premium or discount and oblivious of critical factors in the marketplace. Meanwhile, the world's best investors follow this fund closely… waiting. They are like sharks. They know this is one of the most reliably volatile funds in the world… and one of the easiest to trade successfully. So in this one fund, you have a good litmus test to compare the two major philosophies of investing. Should you buy and hold? Should you pour capital into your 401(k) blindly each month? Or should you time the markets? Should you know the factors that lead funds like TRF to soar to absurd levels and then crash? Looking at this chart, you easily can see the fund peaked twice in 2006 – once in the spring and again at the end of 2006/beginning of 2007. Both of these times, TRF was trading at such an extremely high premium that we noticed it immediately. Here's exactly what we said at the time: In this one investment vehicle, we have both sides of the investment world. Typical individual investors (lemmings, if you will) are dripping capital into this fund, month after month, regardless of the premium or discount and oblivious of critical factors in the marketplace. Meanwhile, the world's best investors follow this fund closely… waiting. They are like sharks. They know this is one of the most reliably volatile funds in the world… and one of the easiest to trade successfully. So in this one fund, you have a good litmus test to compare the two major philosophies of investing. Should you buy and hold? Should you pour capital into your 401(k) blindly each month? Or should you time the markets? Should you know the factors that lead funds like TRF to soar to absurd levels and then crash? Looking at this chart, you easily can see the fund peaked twice in 2006 – once in the spring and again at the end of 2006/beginning of 2007. Both of these times, TRF was trading at such an extremely high premium that we noticed it immediately. Here's exactly what we said at the time: Meanwhile, the world's best investors follow this fund closely… waiting. They are like sharks. They know this is one of the most reliably volatile funds in the world… and one of the easiest to trade successfully. So in this one fund, you have a good litmus test to compare the two major philosophies of investing. Should you buy and hold? Should you pour capital into your 401(k) blindly each month? Or should you time the markets? Should you know the factors that lead funds like TRF to soar to absurd levels and then crash? Looking at this chart, you easily can see the fund peaked twice in 2006 – once in the spring and again at the end of 2006/beginning of 2007. Both of these times, TRF was trading at such an extremely high premium that we noticed it immediately. Here's exactly what we said at the time: So in this one fund, you have a good litmus test to compare the two major philosophies of investing. Should you buy and hold? Should you pour capital into your 401(k) blindly each month? Or should you time the markets? Should you know the factors that lead funds like TRF to soar to absurd levels and then crash? Looking at this chart, you easily can see the fund peaked twice in 2006 – once in the spring and again at the end of 2006/beginning of 2007. Both of these times, TRF was trading at such an extremely high premium that we noticed it immediately. Here's exactly what we said at the time: Looking at this chart, you easily can see the fund peaked twice in 2006 – once in the spring and again at the end of 2006/beginning of 2007. Both of these times, TRF was trading at such an extremely high premium that we noticed it immediately. Here's exactly what we said at the time: Here's exactly what we said at the time: With emerging market speculation heating up again, TRF is trading for a 24% premium right now. If that premium climbs any higher, we predict another obliteration. – Brian Hunt, DailyWealth, December 21, 2006 We published that note in December 2006. By March 2009, it had lost more than 90% of its value. Perhaps more importantly to any long-term, buy-and-hold investor, the decline we foresaw in the fund would have wiped out more than 100% of the accumulated capital gains, assuming you invested as much as 15 years earlier. Now… I'd like you to look at the chart one more time. Look at what happened to the fund in the first half of 2009. It went nearly straight up. On April 17, 2009, we told subscribers to buy Russian stocks. Instead of using TRF, Steve Sjuggerud recommended a nearly identical Scudder Fund, the Central Europe and Russia Fund (CEE). Both went up 150% from their March lows. So if you followed the buy-and-hold strategy in Russian stocks over the last 15 years, you would have made a very small amount of money – or lost money, depending on when you sold your shares. On the other hand, if you applied a few of our secrets, you could have easily traded this fund for more than 100% gains in only a few weeks. And if you watch this fund, you'll be able to make trades like this three or four times each decade. If you watch other similar funds, you'll be able to make trades like this once or twice a year. And let me tell you one more thing about this situation. In January 2007, when TRF was widely overvalued and when most individual investors were clamoring to buy shares – despite the premium valuation – we checked to see if we could sell the fund short. We knew it was going to collapse and wanted to profit directly as it fell. But we couldn't. Why not? Because other professionals had already borrowed all of the available shares to short. In other words, while 401(k) investors were buying and holding a time bomb, Wall Street's pros were lined up, waiting to take their money. That's why we call "buy and hold" "buy and fold." That's what happens. People think they're investors when they buy. But sooner or later, the pain gets so bad and the loss is so big they panic and sell. Wall Street wins. Would you have been able to continue buying the Templeton Russia Fund through the collapse of 2008? Not many people could. Instead, they chase hot sectors and investment fads and buy in at the worst possible time. Then after prices collapse, sooner or later, the pain and fear become unbearable, and they liquidate their investments – usually at the exact bottom. Believe me, the pros know that's what individual investors are going to do. That's how they make their living. Meanwhile, the big mutual-fund companies spend millions on "buy and hold" advertising each year. They give more millions to academic researchers – all of whom "prove" you can't time the market. According to these folks, we shouldn't have been able to do the kind of trading we did with the Templeton Russia & East Europe Fund. They would tell you we didn't have any real edge against the other investors in the fund. They would tell you we just got "lucky" – despite the fact that we do these kinds of trades year after year. And when researchers study actual mutual-fund returns, the results are nothing like the averages you find in the prospectus. Most people who invest in mutual funds never make more than 5% a year on average because they buy the wrong funds at the wrong times and sell at exactly the wrong times. And anyone who was buying stock mutual funds over the last 15 years most likely lost money overall. Buy and hold doesn't work for two reasons: It ignores valuation and sentiment and it ignores human nature. Even if buy and hold did work, it would be a less-than-optimal strategy because, as should be readily apparent to everyone who watches the stock market, the market isn't as "efficient" as so many academics claim. The intellectual rationale for buy and hold is the idea that securities prices instantly reflect all the information available. You can't get an advantage on the market. The best investors can hope to do, therefore, is to get the market's average return. And the only sure way to do this is to buy an index fund, year after year, and hold it forever. This idea – that information is reflected accurately and instantly in the market – is preposterous. In the first place, lots of people trading stocks don't know what they're doing. They can't accurately handicap stock prices because they don't know the first thing about valuation. But even more than this, most of what's important to stock prices is unknowable. Nobody knows what the future holds for things like interest rates and economic growth. People's emotions about these unknowable variables – what we call "sentiment" – make a far bigger impact on stock prices than the latest earnings report. And people's emotions are anything but rational or efficient. You can dramatically increase your returns in common stocks if you're simply more disciplined about when you make major investments. You only want to commit a substantial amount of capital when both valuation and sentiment are in extremely bullish ranges. In short, you want to buy when stocks are cheap and most people are afraid to buy them. Unfortunately, these opportunities don't arise often in U.S. blue-chip stocks. But you can almost always find these conditions somewhere or in some part of the U.S. market. Regards, Porter Stansberry Perhaps more importantly to any long-term, buy-and-hold investor, the decline we foresaw in the fund would have wiped out more than 100% of the accumulated capital gains, assuming you invested as much as 15 years earlier. Now… I'd like you to look at the chart one more time. Look at what happened to the fund in the first half of 2009. It went nearly straight up. On April 17, 2009, we told subscribers to buy Russian stocks. Instead of using TRF, Steve Sjuggerud recommended a nearly identical Scudder Fund, the Central Europe and Russia Fund (CEE). Both went up 150% from their March lows. So if you followed the buy-and-hold strategy in Russian stocks over the last 15 years, you would have made a very small amount of money – or lost money, depending on when you sold your shares. On the other hand, if you applied a few of our secrets, you could have easily traded this fund for more than 100% gains in only a few weeks. And if you watch this fund, you'll be able to make trades like this three or four times each decade. If you watch other similar funds, you'll be able to make trades like this once or twice a year. And let me tell you one more thing about this situation. In January 2007, when TRF was widely overvalued and when most individual investors were clamoring to buy shares – despite the premium valuation – we checked to see if we could sell the fund short. We knew it was going to collapse and wanted to profit directly as it fell. But we couldn't. Why not? Because other professionals had already borrowed all of the available shares to short. In other words, while 401(k) investors were buying and holding a time bomb, Wall Street's pros were lined up, waiting to take their money. That's why we call "buy and hold" "buy and fold." That's what happens. People think they're investors when they buy. But sooner or later, the pain gets so bad and the loss is so big they panic and sell. Wall Street wins. Would you have been able to continue buying the Templeton Russia Fund through the collapse of 2008? Not many people could. Instead, they chase hot sectors and investment fads and buy in at the worst possible time. Then after prices collapse, sooner or later, the pain and fear become unbearable, and they liquidate their investments – usually at the exact bottom. Believe me, the pros know that's what individual investors are going to do. That's how they make their living. Meanwhile, the big mutual-fund companies spend millions on "buy and hold" advertising each year. They give more millions to academic researchers – all of whom "prove" you can't time the market. According to these folks, we shouldn't have been able to do the kind of trading we did with the Templeton Russia & East Europe Fund. They would tell you we didn't have any real edge against the other investors in the fund. They would tell you we just got "lucky" – despite the fact that we do these kinds of trades year after year. And when researchers study actual mutual-fund returns, the results are nothing like the averages you find in the prospectus. Most people who invest in mutual funds never make more than 5% a year on average because they buy the wrong funds at the wrong times and sell at exactly the wrong times. And anyone who was buying stock mutual funds over the last 15 years most likely lost money overall. Buy and hold doesn't work for two reasons: It ignores valuation and sentiment and it ignores human nature. Even if buy and hold did work, it would be a less-than-optimal strategy because, as should be readily apparent to everyone who watches the stock market, the market isn't as "efficient" as so many academics claim. The intellectual rationale for buy and hold is the idea that securities prices instantly reflect all the information available. You can't get an advantage on the market. The best investors can hope to do, therefore, is to get the market's average return. And the only sure way to do this is to buy an index fund, year after year, and hold it forever. This idea – that information is reflected accurately and instantly in the market – is preposterous. In the first place, lots of people trading stocks don't know what they're doing. They can't accurately handicap stock prices because they don't know the first thing about valuation. But even more than this, most of what's important to stock prices is unknowable. Nobody knows what the future holds for things like interest rates and economic growth. People's emotions about these unknowable variables – what we call "sentiment" – make a far bigger impact on stock prices than the latest earnings report. And people's emotions are anything but rational or efficient. You can dramatically increase your returns in common stocks if you're simply more disciplined about when you make major investments. You only want to commit a substantial amount of capital when both valuation and sentiment are in extremely bullish ranges. In short, you want to buy when stocks are cheap and most people are afraid to buy them. Unfortunately, these opportunities don't arise often in U.S. blue-chip stocks. But you can almost always find these conditions somewhere or in some part of the U.S. market. Regards, Porter Stansberry Now… I'd like you to look at the chart one more time. Look at what happened to the fund in the first half of 2009. It went nearly straight up. On April 17, 2009, we told subscribers to buy Russian stocks. Instead of using TRF, Steve Sjuggerud recommended a nearly identical Scudder Fund, the Central Europe and Russia Fund (CEE). Both went up 150% from their March lows. So if you followed the buy-and-hold strategy in Russian stocks over the last 15 years, you would have made a very small amount of money – or lost money, depending on when you sold your shares. On the other hand, if you applied a few of our secrets, you could have easily traded this fund for more than 100% gains in only a few weeks. And if you watch this fund, you'll be able to make trades like this three or four times each decade. If you watch other similar funds, you'll be able to make trades like this once or twice a year. And let me tell you one more thing about this situation. In January 2007, when TRF was widely overvalued and when most individual investors were clamoring to buy shares – despite the premium valuation – we checked to see if we could sell the fund short. We knew it was going to collapse and wanted to profit directly as it fell. But we couldn't. Why not? Because other professionals had already borrowed all of the available shares to short. In other words, while 401(k) investors were buying and holding a time bomb, Wall Street's pros were lined up, waiting to take their money. That's why we call "buy and hold" "buy and fold." That's what happens. People think they're investors when they buy. But sooner or later, the pain gets so bad and the loss is so big they panic and sell. Wall Street wins. Would you have been able to continue buying the Templeton Russia Fund through the collapse of 2008? Not many people could. Instead, they chase hot sectors and investment fads and buy in at the worst possible time. Then after prices collapse, sooner or later, the pain and fear become unbearable, and they liquidate their investments – usually at the exact bottom. Believe me, the pros know that's what individual investors are going to do. That's how they make their living. Meanwhile, the big mutual-fund companies spend millions on "buy and hold" advertising each year. They give more millions to academic researchers – all of whom "prove" you can't time the market. According to these folks, we shouldn't have been able to do the kind of trading we did with the Templeton Russia & East Europe Fund. They would tell you we didn't have any real edge against the other investors in the fund. They would tell you we just got "lucky" – despite the fact that we do these kinds of trades year after year. And when researchers study actual mutual-fund returns, the results are nothing like the averages you find in the prospectus. Most people who invest in mutual funds never make more than 5% a year on average because they buy the wrong funds at the wrong times and sell at exactly the wrong times. And anyone who was buying stock mutual funds over the last 15 years most likely lost money overall. Buy and hold doesn't work for two reasons: It ignores valuation and sentiment and it ignores human nature. Even if buy and hold did work, it would be a less-than-optimal strategy because, as should be readily apparent to everyone who watches the stock market, the market isn't as "efficient" as so many academics claim. The intellectual rationale for buy and hold is the idea that securities prices instantly reflect all the information available. You can't get an advantage on the market. The best investors can hope to do, therefore, is to get the market's average return. And the only sure way to do this is to buy an index fund, year after year, and hold it forever. This idea – that information is reflected accurately and instantly in the market – is preposterous. In the first place, lots of people trading stocks don't know what they're doing. They can't accurately handicap stock prices because they don't know the first thing about valuation. But even more than this, most of what's important to stock prices is unknowable. Nobody knows what the future holds for things like interest rates and economic growth. People's emotions about these unknowable variables – what we call "sentiment" – make a far bigger impact on stock prices than the latest earnings report. And people's emotions are anything but rational or efficient. You can dramatically increase your returns in common stocks if you're simply more disciplined about when you make major investments. You only want to commit a substantial amount of capital when both valuation and sentiment are in extremely bullish ranges. In short, you want to buy when stocks are cheap and most people are afraid to buy them. Unfortunately, these opportunities don't arise often in U.S. blue-chip stocks. But you can almost always find these conditions somewhere or in some part of the U.S. market. Regards, Porter Stansberry On April 17, 2009, we told subscribers to buy Russian stocks. Instead of using TRF, Steve Sjuggerud recommended a nearly identical Scudder Fund, the Central Europe and Russia Fund (CEE). Both went up 150% from their March lows. So if you followed the buy-and-hold strategy in Russian stocks over the last 15 years, you would have made a very small amount of money – or lost money, depending on when you sold your shares. On the other hand, if you applied a few of our secrets, you could have easily traded this fund for more than 100% gains in only a few weeks. And if you watch this fund, you'll be able to make trades like this three or four times each decade. If you watch other similar funds, you'll be able to make trades like this once or twice a year. And let me tell you one more thing about this situation. In January 2007, when TRF was widely overvalued and when most individual investors were clamoring to buy shares – despite the premium valuation – we checked to see if we could sell the fund short. We knew it was going to collapse and wanted to profit directly as it fell. But we couldn't. Why not? Because other professionals had already borrowed all of the available shares to short. In other words, while 401(k) investors were buying and holding a time bomb, Wall Street's pros were lined up, waiting to take their money. That's why we call "buy and hold" "buy and fold." That's what happens. People think they're investors when they buy. But sooner or later, the pain gets so bad and the loss is so big they panic and sell. Wall Street wins. Would you have been able to continue buying the Templeton Russia Fund through the collapse of 2008? Not many people could. Instead, they chase hot sectors and investment fads and buy in at the worst possible time. Then after prices collapse, sooner or later, the pain and fear become unbearable, and they liquidate their investments – usually at the exact bottom. Believe me, the pros know that's what individual investors are going to do. That's how they make their living. Meanwhile, the big mutual-fund companies spend millions on "buy and hold" advertising each year. They give more millions to academic researchers – all of whom "prove" you can't time the market. According to these folks, we shouldn't have been able to do the kind of trading we did with the Templeton Russia & East Europe Fund. They would tell you we didn't have any real edge against the other investors in the fund. They would tell you we just got "lucky" – despite the fact that we do these kinds of trades year after year. And when researchers study actual mutual-fund returns, the results are nothing like the averages you find in the prospectus. Most people who invest in mutual funds never make more than 5% a year on average because they buy the wrong funds at the wrong times and sell at exactly the wrong times. And anyone who was buying stock mutual funds over the last 15 years most likely lost money overall. Buy and hold doesn't work for two reasons: It ignores valuation and sentiment and it ignores human nature. Even if buy and hold did work, it would be a less-than-optimal strategy because, as should be readily apparent to everyone who watches the stock market, the market isn't as "efficient" as so many academics claim. The intellectual rationale for buy and hold is the idea that securities prices instantly reflect all the information available. You can't get an advantage on the market. The best investors can hope to do, therefore, is to get the market's average return. And the only sure way to do this is to buy an index fund, year after year, and hold it forever. This idea – that information is reflected accurately and instantly in the market – is preposterous. In the first place, lots of people trading stocks don't know what they're doing. They can't accurately handicap stock prices because they don't know the first thing about valuation. But even more than this, most of what's important to stock prices is unknowable. Nobody knows what the future holds for things like interest rates and economic growth. People's emotions about these unknowable variables – what we call "sentiment" – make a far bigger impact on stock prices than the latest earnings report. And people's emotions are anything but rational or efficient. You can dramatically increase your returns in common stocks if you're simply more disciplined about when you make major investments. You only want to commit a substantial amount of capital when both valuation and sentiment are in extremely bullish ranges. In short, you want to buy when stocks are cheap and most people are afraid to buy them. Unfortunately, these opportunities don't arise often in U.S. blue-chip stocks. But you can almost always find these conditions somewhere or in some part of the U.S. market. Regards, Porter Stansberry So if you followed the buy-and-hold strategy in Russian stocks over the last 15 years, you would have made a very small amount of money – or lost money, depending on when you sold your shares. On the other hand, if you applied a few of our secrets, you could have easily traded this fund for more than 100% gains in only a few weeks. And if you watch this fund, you'll be able to make trades like this three or four times each decade. If you watch other similar funds, you'll be able to make trades like this once or twice a year. And let me tell you one more thing about this situation. In January 2007, when TRF was widely overvalued and when most individual investors were clamoring to buy shares – despite the premium valuation – we checked to see if we could sell the fund short. We knew it was going to collapse and wanted to profit directly as it fell. But we couldn't. Why not? Because other professionals had already borrowed all of the available shares to short. In other words, while 401(k) investors were buying and holding a time bomb, Wall Street's pros were lined up, waiting to take their money. That's why we call "buy and hold" "buy and fold." That's what happens. People think they're investors when they buy. But sooner or later, the pain gets so bad and the loss is so big they panic and sell. Wall Street wins. Would you have been able to continue buying the Templeton Russia Fund through the collapse of 2008? Not many people could. Instead, they chase hot sectors and investment fads and buy in at the worst possible time. Then after prices collapse, sooner or later, the pain and fear become unbearable, and they liquidate their investments – usually at the exact bottom. Believe me, the pros know that's what individual investors are going to do. That's how they make their living. Meanwhile, the big mutual-fund companies spend millions on "buy and hold" advertising each year. They give more millions to academic researchers – all of whom "prove" you can't time the market. According to these folks, we shouldn't have been able to do the kind of trading we did with the Templeton Russia & East Europe Fund. They would tell you we didn't have any real edge against the other investors in the fund. They would tell you we just got "lucky" – despite the fact that we do these kinds of trades year after year. And when researchers study actual mutual-fund returns, the results are nothing like the averages you find in the prospectus. Most people who invest in mutual funds never make more than 5% a year on average because they buy the wrong funds at the wrong times and sell at exactly the wrong times. And anyone who was buying stock mutual funds over the last 15 years most likely lost money overall. Buy and hold doesn't work for two reasons: It ignores valuation and sentiment and it ignores human nature. Even if buy and hold did work, it would be a less-than-optimal strategy because, as should be readily apparent to everyone who watches the stock market, the market isn't as "efficient" as so many academics claim. The intellectual rationale for buy and hold is the idea that securities prices instantly reflect all the information available. You can't get an advantage on the market. The best investors can hope to do, therefore, is to get the market's average return. And the only sure way to do this is to buy an index fund, year after year, and hold it forever. This idea – that information is reflected accurately and instantly in the market – is preposterous. In the first place, lots of people trading stocks don't know what they're doing. They can't accurately handicap stock prices because they don't know the first thing about valuation. But even more than this, most of what's important to stock prices is unknowable. Nobody knows what the future holds for things like interest rates and economic growth. People's emotions about these unknowable variables – what we call "sentiment" – make a far bigger impact on stock prices than the latest earnings report. And people's emotions are anything but rational or efficient. You can dramatically increase your returns in common stocks if you're simply more disciplined about when you make major investments. You only want to commit a substantial amount of capital when both valuation and sentiment are in extremely bullish ranges. In short, you want to buy when stocks are cheap and most people are afraid to buy them. Unfortunately, these opportunities don't arise often in U.S. blue-chip stocks. But you can almost always find these conditions somewhere or in some part of the U.S. market. Regards, Porter Stansberry And let me tell you one more thing about this situation. In January 2007, when TRF was widely overvalued and when most individual investors were clamoring to buy shares – despite the premium valuation – we checked to see if we could sell the fund short. We knew it was going to collapse and wanted to profit directly as it fell. But we couldn't. Why not? Because other professionals had already borrowed all of the available shares to short. In other words, while 401(k) investors were buying and holding a time bomb, Wall Street's pros were lined up, waiting to take their money. That's why we call "buy and hold" "buy and fold." That's what happens. People think they're investors when they buy. But sooner or later, the pain gets so bad and the loss is so big they panic and sell. Wall Street wins. Would you have been able to continue buying the Templeton Russia Fund through the collapse of 2008? Not many people could. Instead, they chase hot sectors and investment fads and buy in at the worst possible time. Then after prices collapse, sooner or later, the pain and fear become unbearable, and they liquidate their investments – usually at the exact bottom. Believe me, the pros know that's what individual investors are going to do. That's how they make their living. Meanwhile, the big mutual-fund companies spend millions on "buy and hold" advertising each year. They give more millions to academic researchers – all of whom "prove" you can't time the market. According to these folks, we shouldn't have been able to do the kind of trading we did with the Templeton Russia & East Europe Fund. They would tell you we didn't have any real edge against the other investors in the fund. They would tell you we just got "lucky" – despite the fact that we do these kinds of trades year after year. And when researchers study actual mutual-fund returns, the results are nothing like the averages you find in the prospectus. Most people who invest in mutual funds never make more than 5% a year on average because they buy the wrong funds at the wrong times and sell at exactly the wrong times. And anyone who was buying stock mutual funds over the last 15 years most likely lost money overall. Buy and hold doesn't work for two reasons: It ignores valuation and sentiment and it ignores human nature. Even if buy and hold did work, it would be a less-than-optimal strategy because, as should be readily apparent to everyone who watches the stock market, the market isn't as "efficient" as so many academics claim. The intellectual rationale for buy and hold is the idea that securities prices instantly reflect all the information available. You can't get an advantage on the market. The best investors can hope to do, therefore, is to get the market's average return. And the only sure way to do this is to buy an index fund, year after year, and hold it forever. This idea – that information is reflected accurately and instantly in the market – is preposterous. In the first place, lots of people trading stocks don't know what they're doing. They can't accurately handicap stock prices because they don't know the first thing about valuation. But even more than this, most of what's important to stock prices is unknowable. Nobody knows what the future holds for things like interest rates and economic growth. People's emotions about these unknowable variables – what we call "sentiment" – make a far bigger impact on stock prices than the latest earnings report. And people's emotions are anything but rational or efficient. You can dramatically increase your returns in common stocks if you're simply more disciplined about when you make major investments. You only want to commit a substantial amount of capital when both valuation and sentiment are in extremely bullish ranges. In short, you want to buy when stocks are cheap and most people are afraid to buy them. Unfortunately, these opportunities don't arise often in U.S. blue-chip stocks. But you can almost always find these conditions somewhere or in some part of the U.S. market. Regards, Porter Stansberry In other words, while 401(k) investors were buying and holding a time bomb, Wall Street's pros were lined up, waiting to take their money. That's why we call "buy and hold" "buy and fold." That's what happens. People think they're investors when they buy. But sooner or later, the pain gets so bad and the loss is so big they panic and sell. Wall Street wins. Would you have been able to continue buying the Templeton Russia Fund through the collapse of 2008? Not many people could. Instead, they chase hot sectors and investment fads and buy in at the worst possible time. Then after prices collapse, sooner or later, the pain and fear become unbearable, and they liquidate their investments – usually at the exact bottom. Believe me, the pros know that's what individual investors are going to do. That's how they make their living. Meanwhile, the big mutual-fund companies spend millions on "buy and hold" advertising each year. They give more millions to academic researchers – all of whom "prove" you can't time the market. According to these folks, we shouldn't have been able to do the kind of trading we did with the Templeton Russia & East Europe Fund. They would tell you we didn't have any real edge against the other investors in the fund. They would tell you we just got "lucky" – despite the fact that we do these kinds of trades year after year. And when researchers study actual mutual-fund returns, the results are nothing like the averages you find in the prospectus. Most people who invest in mutual funds never make more than 5% a year on average because they buy the wrong funds at the wrong times and sell at exactly the wrong times. And anyone who was buying stock mutual funds over the last 15 years most likely lost money overall. Buy and hold doesn't work for two reasons: It ignores valuation and sentiment and it ignores human nature. Even if buy and hold did work, it would be a less-than-optimal strategy because, as should be readily apparent to everyone who watches the stock market, the market isn't as "efficient" as so many academics claim. The intellectual rationale for buy and hold is the idea that securities prices instantly reflect all the information available. You can't get an advantage on the market. The best investors can hope to do, therefore, is to get the market's average return. And the only sure way to do this is to buy an index fund, year after year, and hold it forever. This idea – that information is reflected accurately and instantly in the market – is preposterous. In the first place, lots of people trading stocks don't know what they're doing. They can't accurately handicap stock prices because they don't know the first thing about valuation. But even more than this, most of what's important to stock prices is unknowable. Nobody knows what the future holds for things like interest rates and economic growth. People's emotions about these unknowable variables – what we call "sentiment" – make a far bigger impact on stock prices than the latest earnings report. And people's emotions are anything but rational or efficient. You can dramatically increase your returns in common stocks if you're simply more disciplined about when you make major investments. You only want to commit a substantial amount of capital when both valuation and sentiment are in extremely bullish ranges. In short, you want to buy when stocks are cheap and most people are afraid to buy them. Unfortunately, these opportunities don't arise often in U.S. blue-chip stocks. But you can almost always find these conditions somewhere or in some part of the U.S. market. Regards, Porter Stansberry That's why we call "buy and hold" "buy and fold." That's what happens. People think they're investors when they buy. But sooner or later, the pain gets so bad and the loss is so big they panic and sell. Wall Street wins. Would you have been able to continue buying the Templeton Russia Fund through the collapse of 2008? Not many people could. Instead, they chase hot sectors and investment fads and buy in at the worst possible time. Then after prices collapse, sooner or later, the pain and fear become unbearable, and they liquidate their investments – usually at the exact bottom. Believe me, the pros know that's what individual investors are going to do. That's how they make their living. Meanwhile, the big mutual-fund companies spend millions on "buy and hold" advertising each year. They give more millions to academic researchers – all of whom "prove" you can't time the market. According to these folks, we shouldn't have been able to do the kind of trading we did with the Templeton Russia & East Europe Fund. They would tell you we didn't have any real edge against the other investors in the fund. They would tell you we just got "lucky" – despite the fact that we do these kinds of trades year after year. And when researchers study actual mutual-fund returns, the results are nothing like the averages you find in the prospectus. Most people who invest in mutual funds never make more than 5% a year on average because they buy the wrong funds at the wrong times and sell at exactly the wrong times. And anyone who was buying stock mutual funds over the last 15 years most likely lost money overall. Buy and hold doesn't work for two reasons: It ignores valuation and sentiment and it ignores human nature. Even if buy and hold did work, it would be a less-than-optimal strategy because, as should be readily apparent to everyone who watches the stock market, the market isn't as "efficient" as so many academics claim. The intellectual rationale for buy and hold is the idea that securities prices instantly reflect all the information available. You can't get an advantage on the market. The best investors can hope to do, therefore, is to get the market's average return. And the only sure way to do this is to buy an index fund, year after year, and hold it forever. This idea – that information is reflected accurately and instantly in the market – is preposterous. In the first place, lots of people trading stocks don't know what they're doing. They can't accurately handicap stock prices because they don't know the first thing about valuation. But even more than this, most of what's important to stock prices is unknowable. Nobody knows what the future holds for things like interest rates and economic growth. People's emotions about these unknowable variables – what we call "sentiment" – make a far bigger impact on stock prices than the latest earnings report. And people's emotions are anything but rational or efficient. You can dramatically increase your returns in common stocks if you're simply more disciplined about when you make major investments. You only want to commit a substantial amount of capital when both valuation and sentiment are in extremely bullish ranges. In short, you want to buy when stocks are cheap and most people are afraid to buy them. Unfortunately, these opportunities don't arise often in U.S. blue-chip stocks. But you can almost always find these conditions somewhere or in some part of the U.S. market. Regards, Porter Stansberry Would you have been able to continue buying the Templeton Russia Fund through the collapse of 2008? Not many people could. Instead, they chase hot sectors and investment fads and buy in at the worst possible time. Then after prices collapse, sooner or later, the pain and fear become unbearable, and they liquidate their investments – usually at the exact bottom. Believe me, the pros know that's what individual investors are going to do. That's how they make their living. Meanwhile, the big mutual-fund companies spend millions on "buy and hold" advertising each year. They give more millions to academic researchers – all of whom "prove" you can't time the market. According to these folks, we shouldn't have been able to do the kind of trading we did with the Templeton Russia & East Europe Fund. They would tell you we didn't have any real edge against the other investors in the fund. They would tell you we just got "lucky" – despite the fact that we do these kinds of trades year after year. And when researchers study actual mutual-fund returns, the results are nothing like the averages you find in the prospectus. Most people who invest in mutual funds never make more than 5% a year on average because they buy the wrong funds at the wrong times and sell at exactly the wrong times. And anyone who was buying stock mutual funds over the last 15 years most likely lost money overall. Buy and hold doesn't work for two reasons: It ignores valuation and sentiment and it ignores human nature. Even if buy and hold did work, it would be a less-than-optimal strategy because, as should be readily apparent to everyone who watches the stock market, the market isn't as "efficient" as so many academics claim. The intellectual rationale for buy and hold is the idea that securities prices instantly reflect all the information available. You can't get an advantage on the market. The best investors can hope to do, therefore, is to get the market's average return. And the only sure way to do this is to buy an index fund, year after year, and hold it forever. This idea – that information is reflected accurately and instantly in the market – is preposterous. In the first place, lots of people trading stocks don't know what they're doing. They can't accurately handicap stock prices because they don't know the first thing about valuation. But even more than this, most of what's important to stock prices is unknowable. Nobody knows what the future holds for things like interest rates and economic growth. People's emotions about these unknowable variables – what we call "sentiment" – make a far bigger impact on stock prices than the latest earnings report. And people's emotions are anything but rational or efficient. You can dramatically increase your returns in common stocks if you're simply more disciplined about when you make major investments. You only want to commit a substantial amount of capital when both valuation and sentiment are in extremely bullish ranges. In short, you want to buy when stocks are cheap and most people are afraid to buy them. Unfortunately, these opportunities don't arise often in U.S. blue-chip stocks. But you can almost always find these conditions somewhere or in some part of the U.S. market. Regards, Porter Stansberry Believe me, the pros know that's what individual investors are going to do. That's how they make their living. Meanwhile, the big mutual-fund companies spend millions on "buy and hold" advertising each year. They give more millions to academic researchers – all of whom "prove" you can't time the market. According to these folks, we shouldn't have been able to do the kind of trading we did with the Templeton Russia & East Europe Fund. They would tell you we didn't have any real edge against the other investors in the fund. They would tell you we just got "lucky" – despite the fact that we do these kinds of trades year after year. And when researchers study actual mutual-fund returns, the results are nothing like the averages you find in the prospectus. Most people who invest in mutual funds never make more than 5% a year on average because they buy the wrong funds at the wrong times and sell at exactly the wrong times. And anyone who was buying stock mutual funds over the last 15 years most likely lost money overall. Buy and hold doesn't work for two reasons: It ignores valuation and sentiment and it ignores human nature. Even if buy and hold did work, it would be a less-than-optimal strategy because, as should be readily apparent to everyone who watches the stock market, the market isn't as "efficient" as so many academics claim. The intellectual rationale for buy and hold is the idea that securities prices instantly reflect all the information available. You can't get an advantage on the market. The best investors can hope to do, therefore, is to get the market's average return. And the only sure way to do this is to buy an index fund, year after year, and hold it forever. This idea – that information is reflected accurately and instantly in the market – is preposterous. In the first place, lots of people trading stocks don't know what they're doing. They can't accurately handicap stock prices because they don't know the first thing about valuation. But even more than this, most of what's important to stock prices is unknowable. Nobody knows what the future holds for things like interest rates and economic growth. People's emotions about these unknowable variables – what we call "sentiment" – make a far bigger impact on stock prices than the latest earnings report. And people's emotions are anything but rational or efficient. You can dramatically increase your returns in common stocks if you're simply more disciplined about when you make major investments. You only want to commit a substantial amount of capital when both valuation and sentiment are in extremely bullish ranges. In short, you want to buy when stocks are cheap and most people are afraid to buy them. Unfortunately, these opportunities don't arise often in U.S. blue-chip stocks. But you can almost always find these conditions somewhere or in some part of the U.S. market. Regards, Porter Stansberry Meanwhile, the big mutual-fund companies spend millions on "buy and hold" advertising each year. They give more millions to academic researchers – all of whom "prove" you can't time the market. According to these folks, we shouldn't have been able to do the kind of trading we did with the Templeton Russia & East Europe Fund. They would tell you we didn't have any real edge against the other investors in the fund. They would tell you we just got "lucky" – despite the fact that we do these kinds of trades year after year. And when researchers study actual mutual-fund returns, the results are nothing like the averages you find in the prospectus. Most people who invest in mutual funds never make more than 5% a year on average because they buy the wrong funds at the wrong times and sell at exactly the wrong times. And anyone who was buying stock mutual funds over the last 15 years most likely lost money overall. Buy and hold doesn't work for two reasons: It ignores valuation and sentiment and it ignores human nature. Even if buy and hold did work, it would be a less-than-optimal strategy because, as should be readily apparent to everyone who watches the stock market, the market isn't as "efficient" as so many academics claim. The intellectual rationale for buy and hold is the idea that securities prices instantly reflect all the information available. You can't get an advantage on the market. The best investors can hope to do, therefore, is to get the market's average return. And the only sure way to do this is to buy an index fund, year after year, and hold it forever. This idea – that information is reflected accurately and instantly in the market – is preposterous. In the first place, lots of people trading stocks don't know what they're doing. They can't accurately handicap stock prices because they don't know the first thing about valuation. But even more than this, most of what's important to stock prices is unknowable. Nobody knows what the future holds for things like interest rates and economic growth. People's emotions about these unknowable variables – what we call "sentiment" – make a far bigger impact on stock prices than the latest earnings report. And people's emotions are anything but rational or efficient. You can dramatically increase your returns in common stocks if you're simply more disciplined about when you make major investments. You only want to commit a substantial amount of capital when both valuation and sentiment are in extremely bullish ranges. In short, you want to buy when stocks are cheap and most people are afraid to buy them. Unfortunately, these opportunities don't arise often in U.S. blue-chip stocks. But you can almost always find these conditions somewhere or in some part of the U.S. market. Regards, Porter Stansberry According to these folks, we shouldn't have been able to do the kind of trading we did with the Templeton Russia & East Europe Fund. They would tell you we didn't have any real edge against the other investors in the fund. They would tell you we just got "lucky" – despite the fact that we do these kinds of trades year after year. And when researchers study actual mutual-fund returns, the results are nothing like the averages you find in the prospectus. Most people who invest in mutual funds never make more than 5% a year on average because they buy the wrong funds at the wrong times and sell at exactly the wrong times. And anyone who was buying stock mutual funds over the last 15 years most likely lost money overall. Buy and hold doesn't work for two reasons: It ignores valuation and sentiment and it ignores human nature. Even if buy and hold did work, it would be a less-than-optimal strategy because, as should be readily apparent to everyone who watches the stock market, the market isn't as "efficient" as so many academics claim. The intellectual rationale for buy and hold is the idea that securities prices instantly reflect all the information available. You can't get an advantage on the market. The best investors can hope to do, therefore, is to get the market's average return. And the only sure way to do this is to buy an index fund, year after year, and hold it forever. This idea – that information is reflected accurately and instantly in the market – is preposterous. In the first place, lots of people trading stocks don't know what they're doing. They can't accurately handicap stock prices because they don't know the first thing about valuation. But even more than this, most of what's important to stock prices is unknowable. Nobody knows what the future holds for things like interest rates and economic growth. People's emotions about these unknowable variables – what we call "sentiment" – make a far bigger impact on stock prices than the latest earnings report. And people's emotions are anything but rational or efficient. You can dramatically increase your returns in common stocks if you're simply more disciplined about when you make major investments. You only want to commit a substantial amount of capital when both valuation and sentiment are in extremely bullish ranges. In short, you want to buy when stocks are cheap and most people are afraid to buy them. Unfortunately, these opportunities don't arise often in U.S. blue-chip stocks. But you can almost always find these conditions somewhere or in some part of the U.S. market. Regards, Porter Stansberry And when researchers study actual mutual-fund returns, the results are nothing like the averages you find in the prospectus. Most people who invest in mutual funds never make more than 5% a year on average because they buy the wrong funds at the wrong times and sell at exactly the wrong times. And anyone who was buying stock mutual funds over the last 15 years most likely lost money overall. Buy and hold doesn't work for two reasons: It ignores valuation and sentiment and it ignores human nature. Even if buy and hold did work, it would be a less-than-optimal strategy because, as should be readily apparent to everyone who watches the stock market, the market isn't as "efficient" as so many academics claim. The intellectual rationale for buy and hold is the idea that securities prices instantly reflect all the information available. You can't get an advantage on the market. The best investors can hope to do, therefore, is to get the market's average return. And the only sure way to do this is to buy an index fund, year after year, and hold it forever. This idea – that information is reflected accurately and instantly in the market – is preposterous. In the first place, lots of people trading stocks don't know what they're doing. They can't accurately handicap stock prices because they don't know the first thing about valuation. But even more than this, most of what's important to stock prices is unknowable. Nobody knows what the future holds for things like interest rates and economic growth. People's emotions about these unknowable variables – what we call "sentiment" – make a far bigger impact on stock prices than the latest earnings report. And people's emotions are anything but rational or efficient. You can dramatically increase your returns in common stocks if you're simply more disciplined about when you make major investments. You only want to commit a substantial amount of capital when both valuation and sentiment are in extremely bullish ranges. In short, you want to buy when stocks are cheap and most people are afraid to buy them. Unfortunately, these opportunities don't arise often in U.S. blue-chip stocks. But you can almost always find these conditions somewhere or in some part of the U.S. market. Regards, Porter Stansberry Buy and hold doesn't work for two reasons: It ignores valuation and sentiment and it ignores human nature. Even if buy and hold did work, it would be a less-than-optimal strategy because, as should be readily apparent to everyone who watches the stock market, the market isn't as "efficient" as so many academics claim. The intellectual rationale for buy and hold is the idea that securities prices instantly reflect all the information available. You can't get an advantage on the market. The best investors can hope to do, therefore, is to get the market's average return. And the only sure way to do this is to buy an index fund, year after year, and hold it forever. This idea – that information is reflected accurately and instantly in the market – is preposterous. In the first place, lots of people trading stocks don't know what they're doing. They can't accurately handicap stock prices because they don't know the first thing about valuation. But even more than this, most of what's important to stock prices is unknowable. Nobody knows what the future holds for things like interest rates and economic growth. People's emotions about these unknowable variables – what we call "sentiment" – make a far bigger impact on stock prices than the latest earnings report. And people's emotions are anything but rational or efficient. You can dramatically increase your returns in common stocks if you're simply more disciplined about when you make major investments. You only want to commit a substantial amount of capital when both valuation and sentiment are in extremely bullish ranges. In short, you want to buy when stocks are cheap and most people are afraid to buy them. Unfortunately, these opportunities don't arise often in U.S. blue-chip stocks. But you can almost always find these conditions somewhere or in some part of the U.S. market. Regards, Porter Stansberry Even if buy and hold did work, it would be a less-than-optimal strategy because, as should be readily apparent to everyone who watches the stock market, the market isn't as "efficient" as so many academics claim. The intellectual rationale for buy and hold is the idea that securities prices instantly reflect all the information available. You can't get an advantage on the market. The best investors can hope to do, therefore, is to get the market's average return. And the only sure way to do this is to buy an index fund, year after year, and hold it forever. This idea – that information is reflected accurately and instantly in the market – is preposterous. In the first place, lots of people trading stocks don't know what they're doing. They can't accurately handicap stock prices because they don't know the first thing about valuation. But even more than this, most of what's important to stock prices is unknowable. Nobody knows what the future holds for things like interest rates and economic growth. People's emotions about these unknowable variables – what we call "sentiment" – make a far bigger impact on stock prices than the latest earnings report. And people's emotions are anything but rational or efficient. You can dramatically increase your returns in common stocks if you're simply more disciplined about when you make major investments. You only want to commit a substantial amount of capital when both valuation and sentiment are in extremely bullish ranges. In short, you want to buy when stocks are cheap and most people are afraid to buy them. Unfortunately, these opportunities don't arise often in U.S. blue-chip stocks. But you can almost always find these conditions somewhere or in some part of the U.S. market. Regards, Porter Stansberry The intellectual rationale for buy and hold is the idea that securities prices instantly reflect all the information available. You can't get an advantage on the market. The best investors can hope to do, therefore, is to get the market's average return. And the only sure way to do this is to buy an index fund, year after year, and hold it forever. This idea – that information is reflected accurately and instantly in the market – is preposterous. In the first place, lots of people trading stocks don't know what they're doing. They can't accurately handicap stock prices because they don't know the first thing about valuation. But even more than this, most of what's important to stock prices is unknowable. Nobody knows what the future holds for things like interest rates and economic growth. People's emotions about these unknowable variables – what we call "sentiment" – make a far bigger impact on stock prices than the latest earnings report. And people's emotions are anything but rational or efficient. You can dramatically increase your returns in common stocks if you're simply more disciplined about when you make major investments. You only want to commit a substantial amount of capital when both valuation and sentiment are in extremely bullish ranges. In short, you want to buy when stocks are cheap and most people are afraid to buy them. Unfortunately, these opportunities don't arise often in U.S. blue-chip stocks. But you can almost always find these conditions somewhere or in some part of the U.S. market. Regards, Porter Stansberry This idea – that information is reflected accurately and instantly in the market – is preposterous. In the first place, lots of people trading stocks don't know what they're doing. They can't accurately handicap stock prices because they don't know the first thing about valuation. But even more than this, most of what's important to stock prices is unknowable. Nobody knows what the future holds for things like interest rates and economic growth. People's emotions about these unknowable variables – what we call "sentiment" – make a far bigger impact on stock prices than the latest earnings report. And people's emotions are anything but rational or efficient. You can dramatically increase your returns in common stocks if you're simply more disciplined about when you make major investments. You only want to commit a substantial amount of capital when both valuation and sentiment are in extremely bullish ranges. In short, you want to buy when stocks are cheap and most people are afraid to buy them. Unfortunately, these opportunities don't arise often in U.S. blue-chip stocks. But you can almost always find these conditions somewhere or in some part of the U.S. market. Regards, Porter Stansberry But even more than this, most of what's important to stock prices is unknowable. Nobody knows what the future holds for things like interest rates and economic growth. People's emotions about these unknowable variables – what we call "sentiment" – make a far bigger impact on stock prices than the latest earnings report. And people's emotions are anything but rational or efficient. You can dramatically increase your returns in common stocks if you're simply more disciplined about when you make major investments. You only want to commit a substantial amount of capital when both valuation and sentiment are in extremely bullish ranges. In short, you want to buy when stocks are cheap and most people are afraid to buy them. Unfortunately, these opportunities don't arise often in U.S. blue-chip stocks. But you can almost always find these conditions somewhere or in some part of the U.S. market. Regards, Porter Stansberry You can dramatically increase your returns in common stocks if you're simply more disciplined about when you make major investments. You only want to commit a substantial amount of capital when both valuation and sentiment are in extremely bullish ranges. In short, you want to buy when stocks are cheap and most people are afraid to buy them. Unfortunately, these opportunities don't arise often in U.S. blue-chip stocks. But you can almost always find these conditions somewhere or in some part of the U.S. market. Regards, Porter Stansberry Unfortunately, these opportunities don't arise often in U.S. blue-chip stocks. But you can almost always find these conditions somewhere or in some part of the U.S. market. Regards, Porter Stansberry Regards, Porter Stansberry Porter Stansberry 
The Templeton Russia Fund (TRF) is about to get crushed again. Stuffed with Russian oil and bank stocks, this ETF is one of the few direct Russia plays in the market… This spring, the premium on TRF hit a whopping 35%. You had to pay $1.35 for every $1 of real value. This huge overvaluation was corrected when emerging markets got obliterated in May. The Russia Fund fared the worst, falling 47% from its peak.
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