Buy and Hold Is Risky

Now more than ever, you need to maintain constant vigilance in monitoring your portfolio.

In its August 14, 2000, issue, Fortune went out on a limb with an article titled “10 Stocks to Last the Decade.” The story described a “buy and forget” portfolio meant to capitalize on overarching trends the magazine predicted would dominate the next ten years. It recommended two companies in each of four categories -- media (Viacom, Univision), finance (Charles Schwab, Morgan Stanley), technology (Broadcom, Oracle) and telecommunications (Nokia, Nortel) -- as well as Genentech and, ahem, Enron.

An investor building a portfolio with these stocks would have wanted to forget about it, all right, but not for the reason the magazine intended. From the magazine’s issue date through the end of 2009, precisely one stock, Genentech, rose in value. The next-best performer, Oracle, was down 34%. Enron shares were worthless and Nortel shares very nearly so. Overall, an equally weighted portfolio of the ten stocks would have lost 44%. Standard & Poor’s 500-stock index (without dividends) was a big winner in comparison, down only 24% over the same period.

Subscribe to Kiplinger’s Personal Finance

Be a smarter, better informed investor.

Save up to 74%

Sign up for Kiplinger’s Free E-Newsletters

Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.

Profit and prosper with the best of expert advice - straight to your e-mail.

Sign up

To continue reading this article
please register for free

This is different from signing in to your print subscription

Why am I seeing this? Find out more here

Whitney Tilson
Contributing Editor, Kiplinger's Personal Finance