Episode 2 - This Is Why Buy And Hold Doesn't Always Work

In this episode we discuss the problems and challenges with the ‘buy & hold’ approach to investing. Put simply, it doesn’t work all the time. Markets aren’t always efficient, and we can instead use valuation tools to manage exposure, and position ourselves to outperform through full market cycles. We get stuck into some practical information on how to use the CAPE (cyclically adjusted price-to-earnings) ratio as one way to guide your path. We present analogies, statistics, and personal experiences of investing through various market cycles. In summary, the key points we covered in this episode are: - Stocks don’t always go up! - The problem with buy and hold: it doesn’t work all the time - The problem with ‘average’ returns - This is why the geometric return is the key to maximizing your long-term wealth - Why you must buy low and sell high to optimise your actual wealth Books mentioned: Mastering the Market Cycle by Howard Marks https://www.goodreads.com/book/show/37570460-mastering-the-market-cycle Probable Outcomes by Ed Easterling https://www.goodreads.com/en/book/show/10314811-probable-outcomes Thanks for listening! Download a free chapter from our book ’ Low Rates, High Returns’ https://www.lowrateshighreturns.com/book/ Find out more about our coaching program: https://gonextlevelwealth.com.au/ Pete Wargent https://www.petewargent.com/ https://www.linkedin.com/in/pete-wargent-37228322/ Stephen Moriarty https://twitter.com/SGM63