There seems to be a pretty lively argument unfolding in the Strategy Lab between John Reese and Andrew Horowitz about the viability of "buy and hold" strategy over the long run...

I thought instead of me offering an opinion I'll just direct you to a great short article from WSJ. I think one paragraph there (the first one)- answers the question brilliantly :) Just look what these same guys where saying when they were only 30% down!

Among the hedge funds with the biggest losses through November is the 788 China Fund, whose returns were down about 95% year-to-date. It was up 115% at the end of 2007, making it one of the best.

"Only the one who sells loses money," the fund's managers, Jacques Mechelany and Benjamin Grenier, said in June of this year, when the fund was down 31%. He who sells, they said, "prevents his own self to ride the unavoidable extremes and volatility of markets that are temporarily disconnected from the reality of fundamentals and benefit from the very strong rebound once the fundamentals come back to the fore."

The punch line is quite simply-"unavoidable extremes" can kill you faster than "timing the market". Those who don't ever sell - could also lose your money fast!

P.S. John Reese though is not a true "buy and holder". He rebalances very frequently which in my opinion is the right thing to do.

Stay safe, skepticalcapitalist@gmail.com