Buy-and-Hold vs Market Timing – What is the Better Investment Strategy?

Dr. Mark Skousen and Mike Turner, two investment experts and writers for www.stockinvestor.com, held a debate against each other in August 2018 at the San Francisco MoneyShow about the best long-term investment strategy for retail investors, with Skousen recommending the buy-and-hold approach and Turner touting his market timing signals.

This article highlights key differences between Skousen and Turner, as each offered their respective expertise and insights. Readers can decide which strategy fits best with their own personal investment goals.

Skousen started off the debate by saying that the buy-and-hold strategy is the best one for most investors. In a buy-and-hold strategy, an investor buys stock at a low price and holds the stock through thick and thin.

In the long-run, the market trend is up. Skousen said he favors stocks that pay out the highest dividends, but that have the lowest price.

Anyone who thinks he or she can pick the top and bottom of a market are fools, Skousen said. No one ever knows the difference between a market correction and the start of a bear market, he added.

Skousen recommends the buy-and-hold strategy because, instead of trying to guess what the market is going to do, he just buys strong dividend-paying stocks and generally holds onto them. The strategy works in the long run, since the market ultimately goes up.

Turner, on the other hand, said that market timing is the best strategy for investors to use. He does not define market timing as picking the tops and bottoms of markets.

Instead, he said that market timing is when an investor buys a stock when the price is low, then sells the stock when the market tops. When an investor sells a stock at the top of the market, Turner said he should hold their cash and sit on their position. When the market drops again, Turner advised investors to reinvest that cash back into the market.

Turner said that if investors continue this process, then they will have higher returns in the long-run versus the buy-and-hold strategy. According to Turner, the buy-and-hold strategy is only successful if it includes profiting despite suffering substantial intermediate losses. When the market crashes, it takes 7.2 years to break even when using the buy-and-hold strategy, Turner said. As a result, he indicated the risk involved with buy-and-hold investing is just not worth it.

Skousen and Turner both gave valid reasons about why their investment strategy was better than the other. Ultimately, it is up to individual investors to decide which strategy fits their own personal needs and interests the best.

If readers are interested in learning more from Skousen and Turner, further information can be found on stockinvestor.com or on the www.markskousen.com and www.TurnerTrends.com websites, respectively.