Timely Advice:
Holding for the Long Term Can Be Very Costly

As many discovered in the persistent bear market of 2000-2002, holding for the long term can cost them dearly. Some brokers and advisers seem to use buy and hold as the answer to every investment question. However, experience has shown that in addition to buying on the strength of vital indicators, selling to lock in profits or to limit losses is a strategy that can boost profits in your portfolio.

Take a list of Fortune magazine’s top ten long-term buys from August 19, 1999. If you were still holding the following stocks three years later in the Fall of 2002, you would have suffered some monumental losses: Bristol Meyers, -66%; Cisco, -54%; Home Depot, -33%; Tyco, -73%; United Airlines, -94%; and WorldCom, -99%. Only two of the ten, AIG and Johnson&Johnson, were up, 6% and 14% respectively. (All numbers are approximate.)

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