September 12, 2007, 7:00 am

The Buy and Hold Trading Strategy: It’s like raising your son Part 2

by: The Financial Blogger    Category: Trading
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This morning, I wrote a guest post on moneyning.com. While David is on vacation, I am taking over his blog for today with the first part of The Buy and Hold Trading Strategy. This is an analogy between a trading strategy and raising your child. You can read on moneyning the stage from the day of his birth until when you son starts to go to school. On my blog, I am presenting the last two stages: Being a teenager and becoming a grown adult.

Dealing with a teenager / Sometimes, you just want to get rid of your lazy stocks!

This is expected to be the worst part of your life as a parent. Things are not necessarily going your way and unexpected events happen without you seeing them coming. Your teen is going through ups and downs and changes a lot during this period. Sometimes, drastic measures need to be taken.

This is also the worst period for your stocks. The company has problem with their internal growth, goes through a strike or legal actions are taken against it. Everything seems to happen and you could not predict anything in advance. Your stock volatile and goes up or down for no reasons. Sometimes, management has to sell a division or cut down employees to put everything back on track.

You are proud of your teenager that became a man / The final result of the Buy and Hold Strategy

Your teen finally made it through college; he found a lovely girl and they moved into their apartment. He is starting a new job and is very appreciated by his friends. His girlfriend is even mentioning the magic word “baby” once in a while. Your son is now an adult with great values. You are now a fulfilled parent.

If you can make it through all these oops and keep your stock, your reward will be significant. Exceptional companies, when they are hold long enough, grant their investors with great yield. You are now a fulfilled investor 😉

Unfortunately, stocks are less predictable than children. For example, you can start with the teenager stage at the very beginning and it could be the case for the next ten years. While in other cases, your stock will skyrocket since the very first day and never stop. Being an investor with a buy and hold strategy is a tough job but also offer great rewards. As it is the case for your children, you never know what your stocks will turn into.

 

 

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Comments

Nice one man! That is good exposure for your blog, gotta love those guest posts 😈

Interesting analogy, as long as the stock is doing well and continues to “grow up” (and I know the thinking is that over the long term it will). Maybe you should have added the “you become a grandparent” stage when the company gets so big they start spinning off divisions and you get new stocks (happened to me when Pepsi spun off Tricon, now Yum Brands – I was quite pleased to get a nice big pile of shares for “nothing”).

by: The Financial Blogger | September 13th, 2007 (7:52 am)

You have to take into consideration that sometimes, you child doesn’t turn as good as you would like but I didn’t really want to write about that part 😉
I like the grandparent stage !:smile:

[…] Heroux presents The Buy and Hold Strategy: it’s Like Raising Your Son Part 1 and Part 2 posted at MoneyNing and The Financial Blogger. Excerpt – “As we are facing a very unstable […]

Great post, I love the analogy! I’ve done both checking the child frequently and the stock price each hour this year…

I’m curious though – the adult child who refuses to move out of your basement would be what kind of stock?

And what if your stock gets taken over – is that the same as if your child get married? Not that anyone does a dowry anymore but that would work 🙂

Mike