Nick Train, investment manager of the Finsbury Growth & Income trust, explains why a long-term buy and hold strategy will always bring investors better returns than trading in and out of risky markets.
Why is it a portfolio that invested sensibly in blue-chip stocks 20 years ago, and has held onto them ever since, performs so much better than many other investment strategies? Let us take the share price gains of an arbitrarily-chosen ten UK blue chips over the last 20 years – all of which might have been a part of said portfolio (see box below) . Despite the disappointments of BT and Marks & Spencer, the average gain on the ten stocks is more than treble: it is up 3.3 times. In the meantime, the FTSE All Share index is up 2.3 times. Of course, with dividends included, and particular...
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