The End of Buy and Hold

So I was reading another article, this time in the February edition of Futures Magazine titled "Buy and hold, RIP: 1900-2007 by Murray Ruggiero Jr. The premise of the article is that the typical strategy of investing by buying and holding a security for a long period of time just doesn't work any longer. He makes a compelling argument in that 2008, 7 years of gains were wiped out.

We all felt the sting as investments dropped 30 to 40% in 2008. I can’t disagree with Ruggiero’s premise. The question then becomes one of what to do now in the world of investing? Ruggiero suggests a long and short strategy executed by investing in ETFs.

He describes this trading strategy by explaining what indicators to use to signal when to take a long position in SPY ETF (The SPY ETF mimics very closely the S&P 500 Index) and when to take a position in the ProShares Short S&P 500 Fund (Symbol SH). Like the name suggests, the ProShares Short, mimics the inverse of the S&P 500.

This long/short strategy sounds interesting and makes sense to me. However it could be difficult to execute if you were a full time employee working during normal business hours. Of course, one solution is to have someone manage your money for you.