Trader says buy and hold is dead . . . until it's not


If you are among the millions of Americans who have watched their 401(k) retirement accounts dwindle since the markets began their downward spiral in 2007, Thomas Kee, president and CEO of Stock Traders Daily, has a message for you. According to Kee, a 16 year market slide is underway, and as a result, buy-and-hold is no longer the best strategy to use for investing.

Mr. Kee hasn't exactly been enthusiastic about buy-and-hold for some time, but now he is offering more evidence to explain why. He is telling anyone who will listen about research he conducted back in 2000 that led him to develop investment strategies based on an economic measure called "The Investment Rate." The investment rate measures the demand for new investment in the economy – it tracks the amount of new money that is flowing into various equity markets, including stocks, bonds and real estate. His theory is that when new money flows into the economy, it drives the markets higher, and when money is being sucked out of the economy, the opposite is true.

In an interview with DailyFinance, he used his research to make a prediction: "The investment rate model tells us that the demand for new investments peaked in 2007, and measured from December 2007, it says that for the next 16 years, the amount of new money available to be invested in our economy will decline progressively every year."