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It is no secret that the financial markets have devastated financial portfolios twice in the last 8 years. Although both market drops have been associated with incidents, such as the tech bubble of 2000 and the real estate bubble of 2008, both are part of a larger "Secular Market Cycle" as illustrated by the following chart courtesy of Barry Ritzholtz.
Chart courtesy of Barry Ritzholtz, TheBigPicture.com and TheChartstore.com
Secular bull markets, like the one in the 1982-99 period, see consistently rising stock prices with short and very brief drops that recover quickly. In such a market buy and hold works well in the long term, particularly after considering trading costs if you should try to catch every move.
Secular bear markets, like the one in the 1966-81 and current periods, see stock prices move in a relative sideways manner with pronounced drops in value that make a buy and hold strategy fruitless. The graph above illustrates the Dow Jones Industrial Average adjusted for inflation for the long-term ("secular") market periods for over 100 years from the beginning of 1897 through 2008.
Given the information in the graph above a traditional stock, bond and cash buy and hold portfolio may not be in an investor's best interest. We invite you to contact us to learn more about our specialized investment strategies that may help you take greater control over your financial future.
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