What am I missing? LTBH is just trend following without the risk management

Brian Degracia

06 Sep 2023 • 1 min read

S&P 500 inexorably up and to the right.

Seems Long Term Buy & Hold has “worked,” because the index charts have risen over time.

(While egregiously violating the standard “past performance is not a guarantee of future results” disclaimer. Any controversy about whether this would be a “thing” if the index charts HADN’T risen over time?)

So, get in because “it’s time in the market not market timing.”

But what LTBH doesn’t have is a rule for getting out.

Logical: having a thesis for entering a position, so when that thesis is violated you have a reason for exiting.

Life is lived this way. Why shouldn’t your stock positions be the same?

**Road trip: enter your car because it’s too far to walk to In ‘n Out Burger, exit your car because you are now home after finishing your animal protein double double and want to go inside to watch The Bachelor.

**Dentist appointment: go because you can’t give yourself a root canal, leave because you got a root canal.

**TV Show: turn on the TV because you want to watch The Bachelor, turn off the TV because the episode has finished and Tiffany the adorable MMA-loving veterinarian from Topeka was eliminated.

**Stock purchase (LTBH division): enter because the market always rises and it is “time in the market not market timing”, exit because…. well, never exit, that’s why it’s called Long Term Buy and Hold you idiot.

In short:

Illogical: see LTBH. Entrance thesis but no exit thesis.

How do you know when you are wrong?

What am I missing?

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