Long-term investors who’ve adopted the buy-and-hold methodology don’t seem too pleased with the way the markets have rewarded their patience. Maybe it’s time to look into a more active trend-following strategy for your exchange traded fund (ETF) portfolio?
Even successful big-shot investors like Warren Buffett, Peter Lynch and David Swensen all recommend that the average investor is better off with index funds, remarks Neil Weinberg for Forbes. That is, they espouse the idea that beating the market consistently is nearly impossible. [ETF Investing and the Art of Patience.]
Still, there are many little-known investors who have done quite well in the investment game without relying on buy-and-hold for achieving portfolio gains.
Investors who are actively trading need to employ technical indicators to help identify when it is best to enter or exit a market, according to Forbes. Sectors and areas of the market come in and out of favor so it is crucial to follow the trends.
Some have contend that being an active trader would incur high trading costs. However, some online brokerage firms are advertising zero commissions on many ETF trades, making this point increasingly moot.