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Buy and Hold? Not So Fast, Says Veteran Financial Services Advisor

When it comes to investing in the stock market, “Buy And Hold” is such a popular strategy that many people may not realize that there are other views on investing.

However, the stock market’s performance since its peak at October 2007 shows that the “Buy and Hold” strategy can be a disaster – and Dennis Tubbergen, veteran financial services advisor, reveals why instead he counsels his clients to devise a well thought out Exit Strategy.

The Buy and Hold Strategy or varietions of it has costs some investors quite a bit in the past 18 months. Consider, for example, index funds.

Portfolio decisions tend to be automatic and transactions are not made frequently, so in general expenses are often lower than those of managed funds. Investors who follow this strategy are often advised that they should buy an index fund which is designed to correlate with the performance of a market index such as the S&P 500 and to hold it for the long term.

The investors who followed this advice since the market peak of Oct. 1 2007 would have had a significant chance of witnessing a significant decline in the holdings in that fund.

Because the Buy and Hold Strategy is so risky in a volatile or bear market, Dennis Tubbergen, a CEO and financial services professional with more than 20 years in the industry advises that instead his clients carefully craft an exit strategy for their investment portfolios.

Tubbergen tells his clients that they should know when they would liquidate an investment, and that they should make that decision before, not after, making the investment.

The traditional advice to buy and hold investments such as stock and equity based investments can produce favorable results in a bull market.

In volatile, or bear, markets, people who use the Buy and Hold Investment strategy may find that they face steep portfolio losses.

That is why Tubbergen says that an exit strategy is a vital part of a disciplined and well thought out investment strategy that can increase one’s chance of investment success over time.