Thursday, July 13, 2006

The Ultimate Buy-and-Hold Strategy

In theory, a “perfect” investment strategy would be cheap, easy to implement and risk-free. It would make you fabulously rich in about a week. Tax-free, of course. We haven’t found that combination, and we don’t expect to. But the Ultimate Buy-and-Hold Strategy is the best real-world substitute that we’ve found.

The Ultimate Buy-and-Hold Strategy produces higher returns than the investments most people hold. It does so at lower risk, with minimal transaction costs. It’s mechanical, so it does not depend on finding the right guru to make the right predictions about an individual company, the market or the economy. You will never again have to rely on financial publications for articles with headlines like “The 10 Funds You Should Own Now.”

Even though this strategy is based on the finest academic research available, it’s simple and easy to understand. If I had to sum it up in one sentence, I’d do it this way:

The Ultimate Buy-and-Hold Strategy uses no-load index funds to create a sophisticated asset allocation model with worldwide diversification and the addition of value stocks and small-cap stocks to a traditional large-cap growth stock portfolio.

If you think you already know what that means and you’re tempted to skip the rest of this article, I hope you won’t. The evidence I’m about to show you is compelling, and I hope you’ll let me present it.

-- Paul Merriman, Merriman Capital Management,

[8/17/14 - 2014 update]

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