Buy, Sell, Hold and Ignore

Maybe it’s me, but I think all this buy-sell-hold nonsense epitomizes all that is wrong with Wall Street. Here’s an example. Yesterday, December 14, Jesup & Lamont upgraded Palm to Hold from Sell. Now think about this. If you had followed J&L’s previous advice, you would have sold Palm. So if their advice now is to Hold Palm, wouldn’t you first have to buy it in order to Hold it?

And what does “Hold” mean at all? A better approach to investing in individual stocks is to continually evaluate whether you would buy or sell the given security at the current price. If the answer is yes, then you continue to hold it. If the answer is no, then you should sell.

Hold is a cop-out rating. It really should be termed “Neutral.” The problem, of course, is that Neutral would imply that the analyst had no opinion one way or the other -- and how could he or she justify their quarter-of-a-million dollar salary without expressing an opinion?

For more investing insights, please check out Your Nest Egg Game Plan: How To Get Your Finances Back On Track and Create a Lifetime Income Stream by Phil Fragasso and Prof. Craig Israelsen.