Buy-and-hold investors hope for the best over the long-term, but unfortunately, every three to four years, like clockwork, bear markets decimate their portfolios. In the last decade, there were two devastating bear markets that wiped out 50% of investor portfolio values, not once but twice. These huge losses resulted in millions of investors having to delay their retirement plans, postpone funding of college education for children and grandchildren, and delay lifes many joys. You simply can’t afford to be invested during these inevitable, large-scale declines. Now, you can use an easy-to-use investing strategy that delivers better returns with far less risk than buy and hold. Leslie N. Masonson, stock market investor, researcher and author, helps you regain control over your portfolio using low-cost, low-risk, ETFs selected with his unique Stock Market Dashboard that reliably signals market bottoms and tops — and can tell you exactly when to get in and out. When it is time to invest, Masonson shows how to use Relative Strength Analysis to purchase the strongest ETF market segments with the best growth potential. He provides a specific investing approach and strategy for individuals with three different levels of risk tolerance: conservative, moderate and aggressive. Replete with examples, Buy-Don’t Hold contains all the easy-to-use information you need to craft an investing strategy that meets your needs, lets you sleep at night, and reaps rewards in bull and bear markets alike.

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28 of 32 people found the following review helpful

How to replace buy and hold investing 20 Jun. 2010

By Steve Burns — Published on Amazon.com

Format: Hardcover Vine Customer Review of Free Product ( What’s this? )

This book is excellent in its ability to show investors how to replace buy and hold investing with a more technical approach that reads the markets actual direction and puts you in diversified investments through ETFs based on your own personal risk tolerance. I have been an active and successful investor for well over a decade and can say the methods in this book quantify many of the trend following techniques that I have used very successfully. While I was able to go to cash before the market meltdown in 2008 and avoid any loss of capital, I had trouble reading when to get back in to the market as it rallied off its lows. This book would have given me many tools to capture more of the uptrend than I did. Here is the basic system presented in this book:

1. Determine your risk tolerance. How aggressive or conservative are you? This will determine how much of your capital enters the market as this system gives buy signals on the way up. Also it will determine the percentage of money you invest in stock ETFs versus bond ETFs.

2. Review all your existing portfolios for possible reallocation based on the system in the book and the markets current buy or sell signal.

3. Evaluate the markets current buy or sell signal based on these eight indicators:

Percentage of stocks above their 50-day moving average. Less than 25% and rises buy, greater than 75% and falls sell.

Nasdaq composite stock index crosses 100-day moving average, from below buy, from above sell.

NYSE new daily highs minus new daily lows. -750 or more and recedes buy. 25% weekly high as % of total issues traded then declines sell.

NYSE bullish percentage

Nasdaq composite with MACD

AAII Weekly Investor Sentiment survey bullish percentage. Goes higher from 25% buy goes lower from 50% sell.

Best six months strategy with MACD. Buy with an MACD crossover up in the S&P index in November through April. Sell with an MACD crossover down from May through October.

Nasdaq summation index MA crossover with MACD confirmation. Using a 5 day ema and the MACD crossover at or near the same date..

4. When the system reads a +3 buy signal invest in the recommended ETF universe based on the best relative strength in each category the percentage of how much of your capital you put in each ETF group is based on your risk tolerance exact recommendations are given. The author gives many useful web sites to use to get the information for relative strength rankings.

Morningstar style (Value and growth, small, medium, and large cap).

SPDR Sectors (Financial, energy, consumer staples and discretionary, technology, industrial, utilities, health care, materials).

iShares countries (Brazil, China, India, Russia, etc.).

Fixed Income (Bond funds)

Specialty (Gold, Oul, Silver, agriculture, real estate, and solar energy).

5. Use stops to protect profits and avoid large losses. Sell when the system gives a sell signal.

The author explains how to measure the buy and sell signals given buy each of the indicators by assigning points. a -3 is a sell and a +3 is a buy. This system is one of the best alternatives I have seen to buy and hold investing. Over the past 30 years if you would have simply bought when the market went above its 200 day moving average and sold when it went below it, you would have doubled your returns. With such simple strategies that out perform why would anyone just buy and hold? The market moves in trends based on the momentum of buyers and sellers, this book will show you how to be on the right side of the move.

107 of 133 people found the following review helpful

All theories sound good — show me the data 4 July 2010

By Doctor.Generosity — Published on Amazon.com

Format: Hardcover Vine Customer Review of Free Product ( What’s this? )

As an avid stock investor for 15 years, I can testify that these are treacherous times for individuals in the market, and it’s getting worse. There are many factors working against mom and pop in the stock market. One is globalization. Yes, I can invest easily in the economy of Vietnam if I wish. But the downside is that my position in a manufacturing company located next door to my home has somehow become sensitive to a debt crisis in Greece or Portugal. These destabilizing factors make it less relevant which stocks or ETF’s I pick. A second development working against the self-managed IRA is computer trading, which today accounts for 70% of all trades and soon may be 99%. It used to be that the market was made of human beings; now it’s you against inscrutable robots running computer algorithms. In this environment, absolutely no one — none of the highly paid so-called experts — has been able to plot a rational course for success in equities. Otherwise, the endowment funds of Harvard, Princeton and Yale universities, which hire the most highly trained full-time professionals in the world, would not have plunged in 2008 along with my IRA and yours. If the head of the Harvard endowment, supported by the best available advice and analysis, can’t figure it out, how can an ordinary civilian? The truth is that depending on the stock market for your retirement through a self-managed IRA has become highly dubious. Most folks, especially those with limited time to devote, would do better buying CD’s even though the yield is low. At least you won’t lose your money.

Against this dismaying background, there are nevertheless hundreds of books, websites, newsletters, and TV shows which purport to offer hot advice on how to invest successfully. The existence of so many diverse approaches to one problem tends to suggest that there is little agreement and no sure path. And there isn’t. Ask about proof of efficacy for any of these principles or algorithms, and one tends to hear a deafening silence.

So now comes Mr. Masonson. His recommendations sound cautious, sensible and rational, and he seems like a nice, fatherly sort of man. His main point is that the classic advice of buy and hold is no longer tenable in today’s crazy market. He believes we should invest in ETF’s instead of individual stocks, and above all guard our principal by selling out of the market when certain bear market warning indicators light up. He then introduces two technical components; the first is the use of ‘relative strength analysis’ to rank ETF’s. Fine. It all seems conservative and intelligent. And the second innovation is eight technical bull/bear signals, including Moving Average Convergence-Divergence and seven other technical indicators, which he calls his Dashboard suite which will predict when the market will go up or down for a long period.

Wait a minute. What was that? He has discovered technical signals that PREDICT when the market is entering a prolonged bear phase. Wow, the holy grail of stock investing? This guy has done it!

Or has he. Folks, please remember this: all theories sound good. The only meaningful question is: Do they work? And not everyone agrees with the Buy — Don’t Hold approach. The main sticking point is the accuracy of the buy/sell indicators. Many stock analysts will say it is impossible to time the market accurately enough, and that jumping out to cash when sell indications cross thresholds will also mean missing upward moves, which can happen in hours. So we have the usual dueling theories in one of those ongoing debates which are more like theology than engineering. Is it obvious which approach is correct? No, it is not obvious. This is quantitative; if the eight indicators give perfectly reliable signals, then yes, such a system will work — as will many others. But results very quickly deteriorate if the signals are off by even a little bit. Somewhere in the middle, there is a crossover point vis a vis buy-and-hold. So where, Mr. Masonson, is the statistical data that supports your strategy? How exactly did you identify these eight signals versus others? How did you verify they should have equal weights? Where is your proof? Is your book a report of painstaking research, or just a ‘feeling’ you have? I would be so much more impressed the author offered not anecdotes but evidence.

The book should at least have shown this was effective by back-testing. This means that the author would pick a date (say in 2005), use his relative strength rules to select a portfolio of ETF’s, and then propagate the simulated portfolio forward using his stated sell and buy indicators at every stage. All the hindsight data is publicly available, and the analysis, although tedious, is not hard to carry out with a few big spreadsheets. The results should then be compared with buy-and-hold for the same portfolio, and perhaps other slightly variant strategies. Also, Masonson would then have a computer model and could study variations as well as the all-important question how sensitive the results are to the accuracy of the ‘Dashboard.’ (No doubt the answer is: very sensitive.) Without this research data Masonson has nothing. He is just a kibitzer, like all the others.

If I sound irritated it’s because I am irritated. We are now five hundred years into the scientific revolution — and have learned that progress comes not from ‘holding philosophies’ however plausible they may sound, but from testing our ideas objectively and mathematically. And the whole subject of financial strategies is riddled with failure, serious failure causing great personal pain — even the Harvard Endowment Fund can’t get it right. Even the CEO of Lehman Bros can’t get it right. Even the Chairman of the Fed can’t get it right. In this environment, investment advisors who offer philosophies but not real research, not even minimal back-testing studies, are just plain lazy. Two stars.

Personally, I am skeptical whether in today’s environment an individual can succeed with any ‘system.’ Investing is about predicting the future, for which there can be no system. There is a universal mathematical truth about trading strategies; because the market is constantly scrutinized by large numbers of participants, any ‘edge’ which is discovered will over time become ineffective because it will be arbitraged by the market and washed out. In other words, if it works, everyone will soon be doing it and it will come to equilibrium and stop working. The time constant over which this can be expected to happen varies from days to months in most cases. I don’t see how any short or medium term rules found in a book can carry meaningful ‘secrets.’

Personal investors have only one edge over computers; long term judgement. Use your personal human judgement to identify long term trends and promising companies, and then — buy and hold.

(Note added later: After posting this I noticed that Masonson has a blog or website where he does report some preliminary back-testing (with mixed results). That’s good but where I come from, people do the research BEFORE publishing the book.)

31 of 38 people found the following review helpful

Don’t Buy or Hold this book — pick something else 26 Dec. 2010

By vancwa — Published on Amazon.com

Format: Hardcover Verified Purchase

The book is a not a good use of money. I just finished the book and realized some things:

1. Much of the first half of the book explains mundane things that anybody buying the book would already know.

2. RS investing in ETFs is nothing new and there are several free sites (like ETFscreen.com) that already make that method of investing very accessible to anybody. I was already doing that. Bring something new to the table.

3. Anybody can cook up an investment theory. His dashboard is just a hodge-podge collection of technical indicators that has no substantive acedemic research or backtesting that validates them. Plus, all elements are given equal weighting no matter what is happening in the economy. Really? REALLY? If it were that simple, I wonder why an investment bank, a mutual fund company, or a hedge fund wouldn’t have developed this years ago. Fidelity with thousands of equity analysts and strategists toiling day in and day out that can’t come up with a model that works, but he can? hmmmmmmm

4. Even if the magic dashboard worked, you would need to collect the data from a multitude of different sites, plug it into Excel and get an indicator value. If the author had done any due diligence and had a site that actually collected these values for you and you could just look easily look at the historical value of the dashboard indicator compared to actual market performance or backtest it over a specific period of time, well — I would be interested in seeing that. As it is, this is just some guy with excess time on his hands just goofing around trying to come up with material to fill out a book.

Bottom line — if you are still curious, go to Borders and buy some coffee and skip the first half of the book. Put the book back on the shelf and let somebody else buy it. This would take you about an hour.

31 of 38 people found the following review helpful

Outstanding book about investing with ETFs 29 April 2010

By T. Conaghan — Published on Amazon.com