What is buy-and-hold investing? Is it the right strategy for you?

UK Investor Magazine
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What is buy-and-hold investing? Is it the right strategy for you?

In life, there is typically an easy or a hard way to do something.

When it comes to investing in stocks and assets, that sentiment is definitely true. Some traders spend hours and invest their hard-earned money trying to uncover the secrets of the market, hoping to find that ‘silver bullet’ that guarantees profits.

As seasoned investors could tell those naïve but well-intentioned individuals, no such thing exists.

Utilizing trading strategies that need volatility, such as swing and day trading, is fraught with risk and complications. So it’s easy to see why – in the end – so many choose a more relaxed, passive form of investment.

A buy-and-hold strategy may not sound that exciting to some, but it can eliminate many of the complications that can trip up even more experienced traders. The premise could not be simpler, and in the fullness of time, the results can be just as effective as for those who take a more hands-on approach.

You can probably guess what buy-and-hold investing is, but is it the right strategy for you?

What is buy-and-hold investing?

Yes, you guessed it, buy-and-hold investing is where you purchase a stock or other form of asset and simply sit on your hands for the medium or long term, riding out the market fluctuations until a pre-determined price is reached.

There’s not much more to it than that – buy-and-hold is a passive form of investment that allows you to profit from an open position without the rigmarole of daily interaction with the market. Buy-and-hold requires no technical expertise in reading charts or signals either. 

It is no wonder the likes of Warren Buffett have opted for this approach in their investment portfolios.

Advantages and downsides of buy-and-hold investing

If you chart the long-term progress of the stock market, you will note that – despite many bumps in the road – the overall trajectory is one of growth and sustainability.

Indeed, with the emergence of new technologies and some rather large companies facilitating those, new highs are being reached all the time.

And so, in theory, buy-and-hold investments feel like a no-brainer.

Of course, it’s not as simple as that, and investing in the right brands from the get-go is essential for success with this particular strategy.

The advantages of buying and holding a position speak for themselves. You invest minimal time and effort, and that should – all being well – ensure that your returns are, pound for pound, more valuable than those who spend countless hours of the day scalping for small profits or taking their chances with swing trading.

There are tax perks to long-term investing too, and again these can yield benefits that active investors can’t take advantage of.

Naturally, there are some downsides to passive investing. Are you getting the most out of the market? Is your capital working as hard for you as it could be?

The phenomenon of ‘FOMO’ – the Fear of Missing Out – can be real for buy-and-hold investors, and so you will need to be disciplined and patient in securing the profit margin you seek.

Note also that some brokers charge overnight and weekend fees for holding open positions, and these will – over time – eat into your margin. Do your homework to find the brokers that offer the most agreeable conditions for long-term investments – Plus500 was reviewed at Ask Traders, and that’s a helpful starting point. 

Is buy-and-hold investing for you?

The type of investing that is right for you will ultimately depend on your personality type.

Some people simply aren’t cut out for passive, buy-and-hold investing – it simply goes against the grain of their psyche.

Alternatively, some investors simply don’t have the time or inclination to study the charts and patterns, perform technical analysis, and dip in and out of the market on an hourly basis when the opportunity arises.

Passive investing *should* yield returns if the stocks and assets you buy grow in line with the overall market, and of course, they can far outperform the market baseline. If you had purchased stock in Apple ten years ago, you are probably reading this article somewhere exotic and hot, with outstanding air conditioning.

When you invest for the long term, you kiss goodbye to that money for months or even years, so as ever, you should only invest a) what you can afford to lose and b) what you can afford not to have for a prolonged period.

But when the moment is right, you should hopefully be able to sell at a handy profit without any of the blood, sweat, and tears that go into more active forms of investment.

FTSE 100 stalls again as companies enter Q2 earnings season

Liam Roche
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FTSE 100 stalls again as companies enter Q2 earnings season

The FTSE 100 is up by 0.13% on Thursday to 7,100.2, as the UK index failed to push on over the last month.

“If the FTSE 100 was a swimmer asked to tread water for as long as possible, it would score a gold medal. The market is stubbornly refusing to make waves and has gone nowhere since May,” says Danni Hewson, financial analyst at AJ Bell.

We are now into Q2 earnings season, while as of yet, positive news has not been transferred over to the FTSE 100 in the form of investor confidence.

“China’s second quarter GDP figures were slightly better than expected, but there is still a sense of unease about the country’s economic outlook. A similar feeling is spreading to other countries and suggesting that the post-Covid rebound may find it harder to keep going at a strong pace,” Hewson added.

“This might warrant ongoing support from central banks and governments, which in theory is positive for markets, but investor sentiment seems to be waning. Expectations have been so high for this massive economic surge, but a more lacklustre outlook could impact investors’ willingness to keep putting money into riskier assets.”

FTSE 100 Top Movers

Avast (13.3%), Experian (4.87%) and Prudential (3.83%) are leading the pack on Thursday with some pretty sizeable gain.

At the other end of the FTSE 100, oil giants and house builders are proving to be a drag, with BP (-2.23%), Taylor Wimpey (-1.6%) and Shell (-1.56%) making up the bottom three.

Avast

Avast, the cybersecurity firm, confirmed it is in “advanced discussions” with NortonLifeLock over the possibility of a merger between the two companies.

The acquisition of its rival signals the FTSE 100 comopany’s intent of consolidating its position in the competitive cybersecurity market.

While Avast said that there is no guarantee that the deal will go through, it has been reported elsewhere that the companies could come to an agreement at some point this month.

Experian

Experian revealed its upbeat quarterly trading update on Thursday, putting its results down to a stronger than anticipated recovery.

For the three months ending on 30 June, the FTSE 100 company saw its total revenue grow by 31% at actual exchange rates, while at constant exchange rates this figure was 27%.

Experian to guide upwards on strong Q1 results

Liam Roche
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Experian to guide upwards on strong Q1 results

Experian is now expecting its revenue growth to fall between 13% to 15%

Experian (LON:EXPN) revealed its upbeat quarterly trading update on Thursday, putting its results down to a stronger than anticipated recovery.

For the three months ending on 30 June, the FTSE 100 company saw its total revenue grow by 31% at actual exchange rates, while at constant exchange rates this figure was 27%.

Organic revenue growth during Q1 2021 was 22%, as each region and segment grew. During the same period last year, organic revenue growth was down by 2%.

“We delivered a strong performance in Q1 through a combination of successful delivery of our innovation-led strategy and faster than expected recovery as economies emerge from the COVID-19 pandemic,” said chief executive Brian Cassin.

Subsequently, Experian raised its full year outlook and is now expecting its revenue growth for the year to fall between 13% to 15% with organic revenue growth between 9% to 11%.

Commenting on the statement, Steve Clayton, fund manager at Hargreaves Lansdown Select said:

“Experian has outperformed its own and the market’s expectations in the quarter to end June. Last year, growth was held back by the pandemic and Experian trod water. But with economies reopening stronger than the company had expected, revenue in the quarter has leaped forward by 31%. Even after we strip out some currency gains and a bit of M&A, underlying growth was 22%, driven by the core Credit Bureaux data and increasingly, their Consumer Services offering.”

“The company are upping their guidance for the rest of the year and now see organic growth coming in at 9-11%, with total revenue growth potentially hitting 15% for the full year to 31 Mar 2022. The business performed strongly in all regions, with underlying growth of 22% in North America, 25% in Latin America and 20% back home in the UK,” Clayton added.

“Crucially, Experian are also talking profit margins higher, suggesting profit growth for the year could be very strong indeed.”

The Experian share price is up by 5.11% during the morning session on Thursday.

Avast confirms takeover talks with NortonLifeLock

Liam Roche
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Avast confirms takeover talks with NortonLifeLock

Avast share price soaring on Thursday following announcement

Avast (LON:AVST), the UK-listed cybersecurity firm, confirmed it is in “advanced discussions” with NortonLifeLock over the possibility of a merger between the two companies.

The acquisition of its rival signals Avast’s intent of consolidating its position in the competitive cybersecurity market.

While Avast said that there is no guarantee that the deal will go through, it has been reported elsewhere that the companies could come to an agreement at some point this month.

“A further announcement will be made if and when appropriate,” the company said via a statement last night.

The £5.2bn firm added that any deal would be structured as a cash and shares offer.

Avast was founded over forty years ago, and has since become one of the largest cybersecurity companies in the world, selling software products to consumers. Its most known competitors historically are Norton and McAfee.

The industry has grown rapidly recently due to an increase in hacking attacks on both companies and individuals.

The Avast share price is up by 13.07% during the morning session on Thursday following the news, now sitting at 571p.

Castillo Copper provides update on ‘outstanding’ drilling results at Big One Deposit

Liam Roche
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Castillo Copper provides update on ‘outstanding’ drilling results at Big One Deposit

All seven drill-holes completed in the campaign so far have appeared to intersect copper mineralisation

Castillo Copper (LON:CCZ), the metal explorer focused on copper across Australia and Zambia, on Thursday reported significant copper mineralisation from drilling at its Big One Deposit in the Mt Isa copper-belt district of north-west Queensland.

The company said its latest drill holes (BO_318-21RC) complement the results announced on 29 June 2021 (BO_315-317RC).

Highlights

  • Drill-hole BO_318RC intersected significant visible copper mineralisation in two distinctive zones – 11m from 89-100m and 34m from 153-187m (apparent thickness) 
    • Massive copper sulphide mineralisation clearly observed (chalcopyrite and chalcocite)  
  • All seven drill-holes completed in the campaign so far have appeared, through visual inspection, to intersect copper mineralisation – the best intercepts are shown in Figure 1 below:

Figure 1: Best Intercepted Mineralisation

Borehole From (m)To (m)Apparent Thickness (m)
BO_318RC89.0 100.0 11.0
BO_318RC 153.0 187.0 34.0
BO_319RC55.0 64.0 9.0
BO_321RC63.0 72.0 9.0
BO_315RC1 61.0 69.0 8.0
BO_316RC1 113.0 120.0 7.0
BO_316RC1 129.0 146.5 17.5
BO_317RC1 90.5 103.0 12.5

By reconciling these new data points with the geological modelling completed to date, Castillo Copper has clearly verified material extensions to known mineralisation and potentially a larger underlying system then initially envisaged.

A key feature behind the success of the current campaign, according to the copper miner, has been the significantly improved targeting, resulting from the effective utilisation of geophysical insights to refine and reshape the drilling programme to boost the collective exploration potential.

All samples from drill-holes BO_318-21RC are currently with the laboratory for analysis, while results
from BO_315-317RC are expected to be received imminently.

Simon Paull, Managing Director of Castillo Copper, said: “Hitting copper mineralisation seven times from
seven starts is an outstanding way to progress the drilling campaign at the Big One Deposit. In particular, the result from drill-hole 318RC is excellent, throwing off two zones of visible mineralisation totalling 45m, and confirms massive copper sulphides are apparent.”

“These intercepts provide clear evidence that known copper mineralisation has been materially extended and that the underlying system could potentially be larger than initially envisaged. With a further 19 drill holes still to come, the Board is delighted with progress to date and looks forward to releasing interpreted insights from upcoming assays results.”

Good Energy reiterates indicative bid rejection

Andrew Hore
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Good Energy reiterates indicative bid rejection

Good Energy (LON: GOOD) has reiterated its rejection of the bid from rival renewable energy supplier Ecotricity. Management has also outlined its reasoning behind the decision.
They believe that the indicative offer of 340p a share in cash is too low even though it is a premium to the previous market price. The argument is that the company is worth an even greater premium than being offered.
Management also believes that it has a strategic plan that provides a clear direction for the company. The focus is energy as a service and mobility as a service, particularly through Zap Map.
The potentia...

Healthcare M&A prospects

Andrew Hore
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Healthcare M&A prospects

There have been four major healthcare-related bids so far this year and there are likely to be more.
The largest bid this year is for healthcare distributor UDG Healthcare (LON: UDG) which is valued at £2.7bn. Both inhaled drug delivery technology and drugs developer Vectura (LON: VEC) and hospital operator Spire Healthcare (LON: SPI) are valued at around £1bn. The value of the bid for Immunodiagnostic Systems Holdings was much lower and it has just been completed. The total value of the bids is £4.6bn, which is nearly one-fifth of the value of the major bids in the first half of 2021.
The fou...

Phoenix Copper share price jumps on update from Empire mine in Idaho

Liam Roche
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Phoenix Copper share price jumps on update from Empire mine in Idaho

Phoenix Copper Share Price

The Phoenix Copper share price (LON:PXC) increased by 16% on Wednesday as the miner made an announcement regarding its Deep Sulphide core drilling programme. The move follows what has been a volatile past six months for the copper miner, which has added 6.55% over the time period. Unlike most companies in the UK, Phoenix Copper saw its share price surge when the pandemic came into effect, in line with the value of the red metal that it mines, as its name suggests.

Sulphide-Rich Mineralisation

Phoenix Copper confirmed via an update on Thursday that sulphide-rich mineralisation had been intercepted below the copper oxide open pit at the Empire mine in Idaho.

The ‘Empire Mine’ was historically mined until the early 1940s at head grades of up to 8% copper. The first drill hole of around 20 has been completed of the 4,500-metre 2021 Deep Sulphide drilling programme.

“These are exceptional results from the first drill hole, suggesting potentially elevated grades of copper, as well as the presence of gold, silver, zinc, lead and perhaps molybdenum by-products. It reinforces our geological model that the deeper Empire underground deposit represents a major ore system, which we are only just beginning to evaluate and understand,” said Ryan McDermott, chief executive of Phoenix Copper.

Phoenix Copper said said further drilling was required to define true thickness, while samples were being logged and prepared for shipping to assay laboratories.

Copper

While the price of copper soared when the pandemic took a stranglehold of the world economy, it has been underperforming over recent weeks. The price of copper reached an all-time-high in May, getting above $10,802 per tonne, before its recent retreat. Investors in the red metal and companies that produce complementary goods will be wondering if and when it is going to see a reversal in its fortunes.

A number of analysts are estimating that the price of copper will rise significantly this year and during Q1 of 2022. Specifically, Michael Widmer, Bank of America commodity strategist, believes that copper could rise to $13,000 per tonne. Widmer added that copper could hit $20,000 per tonne by 2025.

“The world risks running out of copper” amid widening supply and demand deficits, according to Bank of America.

“If our expectation of increased supply in secondary material, a non-transparent market, did not materialize, inventories could deplete within the next three years, giving rise to even more violent price swings that could take the red metal above $20,000/t ($9.07/lb).”

UK house prices soar by 10% over the year to May

Liam Roche
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UK house prices soar by 10% over the year to May

UK average house prices now at £255,000

Following a dip in April, house prices jumped in May, according to data revealed on Wednesday by the Office for National Statistics (ONS).

The average house price in the UK increased by 10% over the year to May, surpassing the 9.6% and 9.9% figures seen in April and March respectively.

Month-on-month, prices edged 0.9% higher to £255,000 in May, following a 1.9% dip in the month before.

Sam Beckett, head of economic statistics at the ONS, said: “House prices grew 10% in the year to May, continuing the trend seen in recent months. Once again it’s property prices in London that are showing the lowest annual growth, with the north west of England showing the strongest.”

“After dipping in April, UK average house prices saw a slight monthly increase in the month to May 2021, nearly returning to the record UK average house price seen in March.” House prices reached a high of £256,000 in March.”

Sundeep Patel, Director of Sales at specialist lender Together, provided additional context, as well as his outlook on the housing market moving forward.

“House prices rose in May this year, up by 0.9% from the month before. Whilst the average house price in the UK now sits at £255,000, the first taper for the Stamp Duty holiday extension has now ended, so we will start to see if the tapered end to the scheme keeps prices elevated or not,” said Patel.

“The government’s tax cut was certainly a successful initiative in bolstering the housing market throughout the pandemic. Hopeful buyers rose to the occasion and made the most of the stamp duty holiday causing house prices to surge in relation to average incomes. However, the rate of purchasing new properties is likely to slow as we learn to live with the pandemic, especially if unemployment rises as analysts already predict. Additionally, with “Freedom Day” getting the official go ahead, enquiries and demand on housing may be put on hold temporarily while consumers decide if diverting lockdown savings towards staycations and travel takes priority for the rest of the summer months.”

Best Western Hotel Group GB announces new CEO

Liam Roche
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Best Western Hotel Group GB announces new CEO

Tim Rumney will take the place of Rob Peterson as CEO later in June

Best Western Hotel (BWH) Hotel Group announced on Wednesday that CEO Rob Peterson, who joined the company in 2018, will leave his position.

Tim Rumney will take his place later in June, having been chairman of BWH Hotel Group for the past five years.

Rumney will take up a position of Interim CEO for at least six months, as BWH will seek to gain stability and continuity in the absence of their current CEO.

Peterson appeared alongside Rumney and other BW hoteliers in the national TV series “A Great British Hotel Chain” on Channel 4, aired in 2020, which saw them generate record-breaking enquiry levels of hotels wanting to join the brand.

Rumney has over 30 years of hospitality experience in hotel groups and the independent sector, owning and operating multiple Best Western hotels, as well as being an independent Hospitality Consultant, advising many other hotel operators during his career.

Rumney has also worked closely with Peterson to restructure the business prior to the pandemic and implement a more proactive hotel development strategy and advanced technology solutions over the last three years.

Commenting on Peterson’s departure and his new role within BWH Hotel Group, Tim Rumney said: 

“It has been a pleasure working alongside Rob since 2018, where his commercial acumen and hospitality expertise has truly benefitted our brand portfolio. At a time where hospitality businesses are still suffering, I am proud to be stepping in as Interim CEO for the brand, to continue the great work Rob and his team have been doing throughout the pandemic, to best support our hotels,” Rumens said.

“We have exciting opportunities ahead of us to refocus the organisation for our members as we emerge from the pandemic and move into the recovery mode as a more effective commercial business whilst retaining our ‘by hotelier for hotelier’ ethos.” 

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