Trading Buy & Hold by Thomas Bulkowski
There’s No Holding On
Trading Buy & Hold
There comes a time when you have to sell your long-term holdings. Here’s how you
know when to sell them.
Trading buy & hold may sound like an oxymoron, but one day the hold in buy &
hold will become a sell. Usually, when someone buys and holds a stock for the
long term, it means they will own it for years, sometimes decades. In 1990 I bought shares of Michaels Stores and after
17 years, had to sell them. I didn’t
have a choice; the company went
private. Fortunately, I made almost
5,000% on the trade. Whether you
have a choice or not, most buy & hold
investments have an expiration date
— a time when it’s best to sell.
When is that time?
Take a look at the chart in Figure
1. In the period leading to the bear
market in 2000, many semiconductor
stocks showed a profile similar
to that of Intel (INTC).
In the late 1990s, the value of
INTC made tremendous gains, but
the velocity ramped up in 2000
when the froth for technology stocks
pushed them to Everest heights. Then
look what happened. The tech bubble
burst and the bear market did the
rest. Since then, the stock has been
stuck at base camp.
To highlight that the plight of
INTC was not alone, I show another
example in Figure 2. The chart of
Anadigics (ANAD), another semiconductor
stock, looks similar to that
of INTC. The stock price waved up
and down and then had a sharp rise
from 1999–2000. After spending
two months in the rarified atmosphere
over $100, the stock started
its return down the price mountain.
At the summit in March 2000, the
stock price reached $112. A year
later, the value of the stock bottomed
at $10.50. An investor seeing that
kind of giveback would question
the sanity of holding a stock for the