Buy, Hold, and Sell!: The Investment Strategy That Could Save You From the Next Market Crash

Praise for
BUY, HOLD, AND SELL!

"Ken Moraif understands how his clients think about money. He has a unique perspective on the markets, and he bravely acts on his convictions."
Steve Onofrio, Senior Vice President, SEI Investments

"Writing in an engaging style filled with stories based on personal experience, Ken first points out many of the gaping problems with the classic buy–hold strategy. He not only explains the problems with buy–hold in a logical manner, but also writes about the personal devastating results that some people actually experienced using the buy–hold strategy. I highly recommend you read Ken′sbook, but more importantly, take the appropriate action after reading it."
James Lange, CPA, Attorney, author of Retire Secure

THE HANDS–ON GUIDE FOR CREATING A SOUND FINANCIAL FUTURE

"Protect your well–deserved retirement. Though nothing is certain in the world of finance, you can take action with your investments and help avoid devastating losses. The first step? Read on, so that you can arm yourself with the knowledge that buy and hold is really just buy and hope, not a viable investment strategy especially for anyone over fifty."
From the Introduction

Join the legions of investors who follow the advice of popular radio host and certified financial planner Ken Moraif. Buy, Hold, and SELL! offers savvy investors a guide to Moraif′s winning buy–hold–sell strategy that goes against the popular buy–and–holdmethod that bankrupted so many during the 2008 market collapse.

Filled with Ken′s wisdom and trademark wit, Buy, Hold, and SELL! debunks the popular investing myths that keep investors in risky markets. This easy–to–read guidebook gives you the know–how to make investment choices that will ensure a sound financial future.

Acknowledgments xiii

Introduction: One Bear Market Can Change Your Life Forever xv

The Inspiration behind This Book xvi

Part One: The Trouble with Buy–Hold: Why It s Dangerous to Your Financial Health

Chapter 1 Buy and Hold: A Bad Strategy for Anyone over 50? 3

Even the Best Investor . . . 4

Buying into the Buy–Hold Myth 5

Chapter 2 60 Is the New 40: What Does That Mean for Your Investments? 7

How Long Will You Live? 8

What Does a Long Life Mean for Retirement? 9

The Longevity–Retirement–Investment Equation 10

Chapter 3 The Bear and the Lake House 15

Chapter 4 The 10 Most Important Years of Your Investing Life 17

More Heavy Lifting 18

The Eighth Wonder of the World? 18

Reverse Compounding 19

The Most Important Years of Your Investing Life 20

Chapter 5 A Buy–Hold Disaster Story 23

Chapter 6 You Know You re a Buy–Holder If . . . 27

Chapter 7 Why Does Buy–Hold Even Exist? 29

Generational Amnesia 30

The Rest of the Story 31

The Rise of Mutual Funds 32

The Best Coin–Flipper in the World 32

The Famous Scene in The Deer Hunter 34

Chapter 8 What Do Economists Say about Buy–Hold? 35

Check Out the Publication Date 36

It s History, Not the Future 37

Siegel Also Admitted . . . 37

The Market s (and Investors ) Irrational Exuberance 38

The Emperor s New Clothes 40

Valuations Schmaluations 40

Who Should You Listen To? 41

Chapter 9 The Multimillion–Dollar Argument for a Buy–Hold–SELL Strategy 43

My Personal Experience with Buy–Hold 44

The Birth of a Sell Strategy 45

Avoiding the Market Crash of 2008 45

Part Two: The Buy–Hold Myths: The Advice That Could Ruin Your Retirement

Chapter 10 Buy–Hold Myth #1: The Market Always Comes Back 51

Some Big Bad Bears 54

Mini–Myth: If You Just Study Past Market History . . . 55

Mini–Myth: Time Is Your Friend 57

Homeland Security 57

Mini–Myth: The Most Successful Investors Stay in for the Long Run 59

We re Not 25 Years Old Anymore 59

Where s the Contract? 60

Chapter 11 Buy–Hold Myth #2: Don t Miss the 20 Best Trading Days 61

A Pig in a Poke 63

When Were the Best Days? 63

Riding the Market during the Best Days 65

The Worst Trading Days (So Far) 65

Avoiding the Big Bad Bear Days 67

Doing the Impossible 68

He s in the Wrong Lane! 71

Missing the Best and Worst 72

Chapter 12 Buy–Hold Myth #3: Don t Be the Fool Who Sells at the Bottom 75

Mini–Myth: You Don t Want to Miss the Rebound 76

Mini–Myth: The Rebound Is Equal to the Fall 78

The Two Fools of Mayberry R.F.D. 79

Which Fool Would You Rather Be? 80

Chapter 13 Buy–Hold Myth #4: Diversify Your Portfolio . . .That s All You Need to Do 83

Put Your Eggs in Different Baskets 84

A Junk Drawer of Investments 86

Diversification Isn t Enough 88

Buying a Drill Bit 89

Chapter 14 Buy–Hold Myth #5: You Won t Make Any Money If You Sell and Sit in Cash 91

Cash Can Be Your Friend 93

Bewitched by Zero 93

That s Not All 95

Security or Surfing? 95

Chapter 15 Buy–Hold Myth #6: You Haven t Lost Any Money Unless You . . . 97

Shame, Shame, Shame 98

Mini–Myth: Future Appreciation 99

A Flat–Out Lie 100

Why They Don t Want You to Sell 100

Why You Fear Selling 101

Buying Stuff Is Fun 104

Live to Fight Another Day 104

The Real Answer 105

Chapter 16 Bits and Pieces: More Buy–Hold Nonsense 107

Ten Years Twaddle 108

Can t We Just Use the P/E Ratio? 108

A Word about Warren Buffett 110

Part Three: Buy, Hold, Sell: An Introduction to Sell Strategies

Chapter 17 What s beyond the Buy–Hold Myth? 115

Not Market Timing 116

Even If You Could . . . 116

Trends and Tides 117

Chapter 18 The 200–Day Moving Average Strategy 119

How to Calculate the 200–Day Moving Average 120

The 200–Day Moving Average in Action 121

Backed Up by History 124

Returns and Risks 126

Using the 200–Day Moving Average 128

Why This Strategy Works 128

Why It Works EspeciallyWell for Investors over 50 128

Chapter 19 The Trailing Stop–Loss Sell Strategy 131

The Trailing Stop–Loss 132

Setting Your Stop–Loss Point 132

Stock Behavior 133

Beta and Standard Deviation 133

Take Tech Stocks, for Example 135

Chapter 20 When You Should Not Sell 137

More Event–Driven Market Drops 139

If You Can Point to a Specific Event . . . 141

If There s More Than One Reason for a Drop . . . 142

The 2008 Bear 142

Use Your Sell Strategy, Unless . . . 144

Chapter 21 Sell Strategy Pros and Cons 145

False Alarms 145

The Financial Tornado Warning 146

Transaction Costs and Taxes 147

A Cautionary Tale 148

Put the Odds in Your Favor 149

Don t Be the Hare 149

Chapter 22 More Reasons to Use a Sell Strategy 151

Bonus Reason #1 to Have a Sell Strategy 151

Bonus Reason #2 to Have a Sell Strategy 152

Real Life by the Numbers 153

Bonus Reason #3 to Have a Sell Strategy 154

Chapter 23 The Magic Number Strategy 157

How Strong Is Your House? 158

Your Magic Number 158

How Much Will You Need? 159

Calculating Your Magic Number 159

The Magic Number and the Musician 163

Chapter 24 The Rebalancing Strategy 165

Reap the Rewards of a Rebalanced Portfolio 167

Getting Off the Titanic 169

Chapter 25 Execute or Get Killed 171

It Doesn t Matter Why You Sell . . . 172

You Can t Climb the Pyramids 172

A Giant Bowl of Spaghetti 173

Remember New Orleans 174

Chapter 26 A Simple Action Plan 175

Chapter 27 Armed with Knowledge 177

P.S.: What Do You Think Will Happen Next? 180

Appendix 181

About the Author 185

Index 187

KEN MORAIF, CFP, has been named one of the top 100 independent financial advisors in America by Barron′s Magazine (2012 2014). He heads up the financial and retirement planning firm Money Matters with Ken Moraif, one of the top 50 fastest–growing financial advisory firms according to Financial Planning Magazine. He hosts a weekly radio show, Money Matters with Ken Moraif, and is a frequent guest on CNBC and Fox Business. He has written for or been quoted by Forbes, Kiplinger′s Personal Finance, MarketWatch, The Wall Street Journal, and more.