Charles B. Carlson, CFA


I consider myself to be a buy-and-hold investor. I tend to buy stocks for long periods of time — 10 years or longer is my typical holding period. I happen to believe that buying stocks for the long term is the best way to build wealth in the stock market. The tax system is too onerous on short-term gains to be trading stocks. 

Having said that, I realize that buy-and-hold investing does not always provide big returns during all market periods. In fact, selling some stocks would have saved me a lot of money over the last few years. 

For that reason, I think it makes perfect sense to balance out a predominately buy-and-hold portfolio with a smaller portion of investment funds focused on different investment strategies. If you think about it, it is one more way to diversify a portfolio. After all, we diversify investment portfolios across and within asset classes. Why not diversify them further across different investment styles? 

What I like about balancing a long-term investment strategy with a worst-to-first strategy is that you will be forced, in part of your portfolio, to take some profits off the table each year (providing, of course, the strategy does its job that year). Taking profits is not necessarily a bad thing and can be a very good thing during choppy market periods, when short-term strategies tend to do better than long-term strategies. 


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