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Kass: The Death of Buy and Hold?

An instantaneous dissemination of information spells trading opportunity. The delivery of news and information has also changed the market landscape. When I was a kid on Long Island, back when there was no business news on television, I purchased the New York Post's late edition to get stock prices. Today, Bloomberg, CNBC and Internet sites like this one provide instant information (news and stock prices) to market participants. In an instant-gratification world populated by more instant-gratification investors (both individual and institutional), a premium is put on quick reaction time. Not only are individual stock moves rapid as news is swiftly disseminated but so is industry share movement. Anticipating sector rotation has become a more important determinant of portfolio performance in recent years and will continue for some time to come.

Scarecrow: I haven't got a brain ... only straw.
Dorothy: How can you talk if you haven't got a brain?
Scarecrow: I don't know. But some people without brains do an awful lot of talking, don't they?
Dorothy: Yes, I guess you're right.

-- The Wizard of Oz

The depth of the market and economic slump in the past 12 months has undressed many money managers who, similar to the Wizard of Oz, have hidden behind the curtain of a buy-and-hold strategy as they have failed to recognize the swift impact on many of the company franchises they admired. In many cases, their analysis was wrong, circumstances changed too quickly for them to react, or they were paralyzed by inertia -- and they paid the price in large unrealized losses.

A buy-and-hold strategy may not be dead, but a thoughtful balance between long-term investing and gaming short- to intermediate-term trades is likely the recipe for investment success in the years ahead.

Investors, we are not in Kansas anymore.

TheStreet.com has a revenue-sharing relationship with Amazon.com under which it receives a portion of the revenue from Amazon purchases by customers directed there from TheStreet.com.

Doug Kass writes daily for RealMoney Silver , a premium bundle service from TheStreet.com. For a free trial to RealMoney Silver and exclusive access to Mr. Kass's daily trading diary, please click here.


Know What You Own: Doug Kass mentions a few bank stocks; JPMorgan Chase (JPM - Get Report), Bank of America (BAC - Get Report) and Citigroup (C - Get Report) are other industry names. For more on the value of knowing what you own, visit TheStreet.com's Investing A-to-Z section.

At the time of publication, Kass and/or his funds had no positions in the stocks mentioned, although holdings can change at any time.

Doug Kass is founder and president of Seabreeze Partners Management, Inc., and the general partner and investment manager of Seabreeze Partners Short LP and Seabreeze Partners Long/Short LP.

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