One of the great Jack Bogle’s most memorable quote is “Buy and hold, but don’t forget the hold”. What is the meaning behind this quote. Lets say you have a stock or ETF that you have bought thereby satisfying the buy part of the equation. You’re now contemplating buying more shares to add to your position of hopefully a total stock market index fund. What Mr. Bogle is saying is that holding is far greater than buying or selling. It doesn’t matter if or when you buy, but it makes the world of difference if you hold. It doesn’t matter if you buy at the top of the market or the bottom, if you continue to hold through the swings of the market you will come out on top.
Now it may take 5, 10 or even 20 years, but just hold. If you don’t want to catch a falling knife then don’t, just hold and you will come out on top. If you don’t want to sell at the bottom and buy at the top then don’t and just hold. If you don’t want to dollar cost average and just want to buy a lump sum you already know what to do. Hold. If you don’t know when to enter the market then you’re missing the big picture. It’s all about the hold and not the buy.
In 2017 I put a small sum of money into my betterment account and forgot about it. I opened the account at the end of 2019 after that 28% market return and also the 19% return in 2017 and I was angry at myself. Why didn’t I just dollar cost average a little bit of money into this account over the years. If I did then I would have made more money, but I missed the point. I should have patted myself on the back for leaving that money there and holding. If I didn’t hold then I would have never gotten the returns of the market. I did the best and hardest thing to do. Which is to do nothing, but hold.
Hold and do all that you can to hold. That means having a 3-6 month emergency fund. That means having a side hustle. That means knowing your risk tolerance so you’re not overweighted in stocks and sell out during a market crash. That also means resisting the urge to time the market. That means having an investment policy statement so that you know what to do with a windfall of cash or if you lose a large amount of cash either in the market or due to a costly life event.
Just know when to hold them because you already know when to fold them. That’s when you have achieved Warren Buffett’s favorite holding period. Forever.