For the past two years on Wall Street, the once-beloved buy-and-hold investment strategy was about as popular as swine flu.
With volatility running at historically high levels and investors looking for any safety valve they could find, the old tradition of sitting on stocks despite the gyrations in the market fell sharply out of flavor.
Yet now, with the market nearing its year-ago level and fear gauges back near normal, everything old is new again when it comes to investing.
Portfolio managers again are talking about long-range investment plans and advocating old-school strategies like dollar-cost averaging. Investors, though not entirely comfortable with the rally, are no longer looking to sell every time the market heads south.
Investment houses, meanwhile, are reporting near historic levels of engagement from clients, all at a time when stocks are well off their all-time highs but seemingly fast on the road to recovery.
"What I think you're starting to see is people have a bit of confidence," says J.J. Kinahan, chief derivative strategist at online brokerage TD Ameritrade . "They're not going full-bore back into the market—they're starting to dip their toes in the market a little more."
The confidence has manifested itself in "two camps," Kinahan says.
On one hand, those who are more inclined to trade are doing so at a higher rate, with TD Ameritrade posting one of its highest volume days ever on Sept. 16, two days before the market's quarterly quadruple-witching day that marks the expiration of four options contracts.
The other trend has shown itself as increased conviction from retail investors, who are bringing money in off the sidelines and taking demonstrable measures to show they again are engaged in the market. Sentiment has been helped by a drop in the Chicago Board Options Exchange's Volatility Index towards the 20 level, generally the barometer for any significant level of fear in the market.
At E*Trade , a primary competitor of TD Ameritrade, total daily average revenue trades, or DARTs, grew 37.4 percent in August compared to the previous year. TD Ameritrade reported a similar jump, with the daily average hitting 431,000 in August, up from 371,000 in July.
The metrics, taken in context with a gradual move higher in stocks and a 138 percent growth in trading accounts at E*Trade, indicate to some analysts a higher level of investor conviction and a mindset that it's time to get back into stocks for the long haul.
"Not being in the market doesn't get you anywhere," says Diane de Vries Ashley, managing partner at Zenith Capital Partners in Coral Gables, Fla. "If your one fundamental desire is to make some reasonable money, you can't not be in the market and you can't make the assumption that it's always going to go up. You have to be prepared to take a lump of coal every now and then."
After months of meager traffic on the exchanges volume is beginning to pick up, and so is investor engagement.
E*Trade reported a 138 percent increase in year-over-year new accounts. The company said use of its online investment tools grew more than 50 percent and attendance at seminars has risen 16 percent.
The trends indicate both a broader view of the market and a more involved long-term investor.
"This is all part of people moving from a place where they were intimidated by the markets to start looking towards investing again," says Liat Rorer, E*Trade's vice president of product management. "Overall what we've seen is people much more involved with their money and much more wanting to get themselves educated."
To be sure, the old buy-and-hold model may never fully reappear. The rapidly changing news cycle and the pace of moves in the market may well have altered investor behavior permanently, and advisors know there always will be times when clients have to move quickly to capitalize on opportunities.
"Buy and hold is still a valid strategy, it's just not an entire strategy," says Peter Miralles, president of Atlanta Wealth Consultants. "Just too many things happen too quickly nowadays."
Miralles says sitting in consumer and oil stocks, for instance, can hold up well but it's not a strategy that works as well in some areas of technology.
Moreover, jumps like the market has shown over the past six months, in which the major indexes have gained as much as 60 percent, will always be good times for investors to rethink and rebalance their portfolios.
This rally has been no exception, even though the market has consistently moved higher even in September, traditionally its worst month of the year.
In a much more docile environment, then, now could be the ideal time to hunker down and look for the long haul.
"If you've made your position back to where it was I would take some off the table right now," Ashley says. "I don't think these are great times to be investing everything new. We've had our caviar."