A lot of these myths trace back to people looking for investing "shortcuts" rather than actually doing their homework to find a good investment.

Another myth: Buy and Hold will always work as a good investment method.

HI

Great information for us.

Reverse mortgage.

@ProudToBeAChristianFruitcake@xanga - Buy and hold will only be effective in an extended "Bull Market" such as we have experienced. Buy and hold will destroy your account in an extended "Bear Market", which many economists say we are in now.

For a safeguard, one must limit losses on their accounts, which means taking a more active role than buy, hold, and forget.

@ProudToBeAChristianFruitcake@xanga - You bring up several common perceptions about "buy and hold", which can be added to the list of myths.

You used Walmart stock as an example, but what if AIG or GM stock was used? AIG is still suffering huge declines from it's 2007 high, and GM went bankrupt. A better gauge is an index like S&P 500 or DJ30 which reflects the overall market in general.

If you bought a certain stock at $50/share and the price declines to $40/share, did you lose any money? How about if it drops to $20/share? You say no, that you've only lost value- but that's inaccurate, although many people believe this. Value is equivalent to money. If your cash out value decreases, then for all intent and purposes you've lost money. Using your logic, the stock can drop to 1 cent and you would say that until you actually cash out, haven't lost any money, but that's obviously not that case.

The bottom line is "buy and hold" is no substitute for proper risk management. Letting a stock go from $50 to 1 cent in the hopes that it will eventually recover reflects very poor financial management. The same thing can be said for anyone who did nothing with their investment accounts when the market was at 14K and continued to do nothing as it dropped to 6.5K in march of this year. You say doing nothing wasn't a big deal since the market recovered to 10k again, but neither you nor I knew what the market was going to do back in March. We can't invest in the past. It the market continued lower to 5K and stayed there, would you still feel good about holding onto your investments from 14K?

Another example are those who bought tech stock near Nasdaq "5000" and held onto it. It's been over 10 years and the Nasdaq is still less than half that value.

As I've stated "buy and hold" will not work if the market continues to trend lower for an extended time. If the market continues to trend higher, then it's not an extended Bear market. An extended Bear market will see the market head back down again and make new lows. Buy and hold in that situation will just have your net value continue to drop.

At a certain point, there will not be enough time for you to wait for the market to restore your lost money.