Ed Dempsey, founder of Pension Partners, a New York City-based financial advisor, is not a fan of buy and hold investing. His style is “buy and rotate” and requires intensive ongoing analysis of what sectors are paying off now and when it’s time to cycle out of them.
“Markets,” Dempsey says, ” are skilled at teaching people to play the next market wrong. ” Buy and hold he finds “especially dangerous” in the current fast-paced and volatile investing landscape. It’s a strategy that works best in periods of economic stability and growth.
Recently precious metals have done well for him, as have cotton, coffee and grain. He calls large cap technology “very very strong” and thinks the difference between the weakness of oil stocks and the strong price of oil could mean those stocks are in for a climb. But on any given day, Dempsey could change his mind, he warns. What he liked on November 3 when he talked to Portfolioist could be on the outs by the time you’re reading this.
We talked to him in two parts.
First we discussed the mid-term elections and the impact that’s likely to have on the markets. While he notes that historically equities have benefited from divided government, and that Americans seem to like that state of affairs, he also notes the important signal that was sent to Mr. Obama and the displeasure with his economic agenda and bailouts in general. And rather than predicting this will be a time of placid certainty, he expects plenty of uncertainty to continue.
In the second part of our conversation, Dempsey digs into the asset rotation investing approach he’s taken and the dangers of buy and hold.
Dempsey has been in the investing business since 1987, when he began working as a consultant to pension plans for small businesses and entrepreneurs. Over time, he moved away from mutual funds and into directing his own investments, analyzing the markets and world wide trends to determine where he’d like to be invested at any given time.
What do you think of his argument? Do you rotate into and out of asset classes periodically, and had the strategy worked for you? Your comments welcome.
Please Note: This video expresses the views of Edward M. Dempsey, CFP, and such views are subject to change without notice. Pension Partners LLC has no duty or obligation to update the information contained herein. Further, Pension Partners LLC makes no representation, and it should not be assumed, that past investment performance is an indication of future results. Moreover, wherever there is the potential for profit there is also the possibility of loss. This video is being made available for educational purposes only and should not be used for any other purpose. The information contained herein does not constitute and should not be construed as an offering of advisory services or an offer to sell or solicitation to buy any securities or related financial instruments in any jurisdiction. Certain information contained herein concerning economic trends and performance is based on or derived from information provided by independent third-party sources. Pension Partners LLC believes that the sources from which such information has been obtained are reliable; however, it cannot guarantee the accuracy of such information and has not independently verified the accuracy or completeness of such information or the assumptions on which such information is based. This article, including the information contained herein, may not be copied, reproduced, republished, or posted in whole or in part, in any form without the prior written consent of Pension Partners LLC.