NEW YORK (TheStreet) -- The more I consider their mantra, the more I think some people who consider buy-and-hold investing "dead" simply aren't very good stock pickers. Or position managers.
At first blush, I was going to say
Sure, just putting your money in an index wouldn't have worked all that well
, but that's not true either. Consider the performance of the Nasdaq and S&P 500, as represented by the
SPDR S&P 500
, over the last decade.
And imagine if you regularly added to a position in the Qs or SPY and/or bought more on dips, corrections and crashes.
But we'll set aside the irrelevance of stock picking when you can just buy an index and do quite alright for yourself in the stock market, at least historically speaking. Most people make this more complicated than it is. If you're not going to buy index funds or, if they just don't perform all that well, it absolutely comes down to stock picking.
I started thinking along these lines when I saw that, seemingly out of nowhere,
is almost an $8 stock.
My biggest problem -- back when I could own individual stocks (As an employee of
, company policy prohibits me from owning individual stocks other than TST) -- was
adhering to a buy-and-hold philosophy.
Wendy's might be the best example.
In April of 2012, I wrote about the company as a freelancer for
. Comparing Wendy's to
, I predicted
. While I would hardly call the turnaround complete, if you bought WEN at the beginning of 2012 -- like I did -- you're sitting pretty today. The stock is up approximately 41% since then.
Now might be the time to take some profits. Not when I did. I could lie and say I sold because I had to ahead of full-time employment at
. Not so. I sold long before I became full-time, basically breaking even on the transaction.
I made money on DPZ, but also sold that one way too early.
Another one that makes me want to stick a toothpick in my eye --
. Having always loved that company's long-term prospects, I purchased 500 shares as a 25-year old sometime around the year 2000.
As was the case with WEN and DPZ, I lost patience and sold.
Nothing -- not one thing -- had changed with my original conviction for buying stock in each company. Nothing. So, in these cases, I was actually a great stock picker, but just a horrible position manager. It's really quite irrational. You have a thesis. You understand that, particularly in retail, it takes some time to develop so impatience leads to anxiety and a shallow questioning of your original reasoning. You sell. You regret it.
On the flip side, if you bought and held
ten years ago, you did far better for yourself than if you did the same with
Over a five-year period, you would have actually lost money on HPQ and earned a relative pittance on CSCO.
Depending on when you bought them over the last decade, you needed to reassess why you bought HPQ and CSCO to avoid losing money or subpar returns. AAPL and AMZN - a different story.
I tend to focus on writing about tech and media companies these days. That's how I feel best relating to investors and the broader audience. But it's instructive, whether you can own stocks or not, to go back once in a while and reconsider the obvious. For many investors, however, the obvious only appears that way in hindsight.
Written by Rocco Pendola in Santa Monica, Calif.
Rocco Pendola is
Director of Social Media. Pendola's daily contributions to
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