Ritholtz's 10 Trends To Watch

Barry Ritholtz of FusionIQ and The Big Picture blog recently offered his “10 Trends to Watch in Finance for 2013”, and among them is “The death of buy-and-hold has been greatly exaggerated.”

“Investors have a tendency to take the wrong lesson from recent experiences, and this one is no different,” Ritholtz writes in his Washington Post column. “Buy-and-hold investors don’t have a lot to show since the market peak — 2000 or 2007 — but that is more about valuation than anything else. Since the punditocracy declared the end of buy-and-hold investing, something interesting has happened: Ten-year buy-and-hold returns became half-decent. Time has moved today’s 10-year-return start date near the post-2003 dot-com bust lows (March 2003). And three-year returns have outperformed both tactical portfolios and global macro as an investment style.”

Ritholtz says the lesson is “not that buy-and-hold is dead. Rather, it’s that when you begin investing and the valuation you pay matter a great deal to your returns.”

Ritholtz’s other trends to watch include “Demographics are a huge driver” of the economy and markets, and “The Fed still holds the system together”. In fact, he says that “without [the Federal Reserve’s] extraordinary intervention, the United States would probably be in a deep recession, home foreclosures would be considerably higher and major money-center banks would either be begging for another bailout or declaring bankruptcy.”