I'm starting to think something that may seem heresy for a trader: could be possible that the best Buy & Hold strategy is:
1.- Find true traders
2.- Buy their uncorrelated darwins
3.- Never sell
Even great darwins like NTI has had very bad days. NTI had a 1 year DD of -20%, and then more that another year until get a new ATH, so it was 2.3 years stagnation!. And that for one of the most respected traders here! But at the end he got to reverse it, and made new highs.
Let's imagine that these are darwins equity curves, with a history of 10 years:
Interesting curves, right? Ups and downs, but at the end, always growing. But actually, as you know, those are the curves of the Dow Jones since 1915 and the SP500 since 1928, adjusted for inflation. They always go up in the long run. It doesn't matter economy, it doesn't matter even wars. After some years of DD they're going always up, up, up. I think that the same may happen for darwins with real traders behind them, that slowly adapt and improve their darwins without changing the good trading style. So these days I'm wondering if the darwin made by a true trader would be exactly like the SP500 or the Dow.
The fundamentals would be:
- Economy -> always up in the long term (decades) -> SP 500
- Good trader doing its job -> always up in the long term (single digit years) -> Darwins
My hypothesis is that for really good darwins, for a B&H, may be silly to sell them even if they go below 45. And if we get uncorrelated enough darwins, we'll get rid of long DD in the long term thanks to diversification. If those are really good darwins, in a couple of years very probably they'll be doing again new ATH, despite horrible DD.