In his latest column for the New York Times, Mark Hulbert examines an interesting study on buy-and-hold investing.

The study — “When Everyone Runs for the Exit,” by Lasse H. Pedersen, professor of finance at New York University, concludes that it’s not traders or true long-term buy-and-hold investors who get hurt the most in a liquidity crisis like the one we’ve just experienced — it’s the investors who end up stuck in the middle.

Pedersen told Hulbert about three different categories of investors, using a poker analogy. The first are the “strong hands”, Hulbert explains, writing, “Not only are they emotionally strong enough to avoid selling into a panic, but they also have deep-enough pockets to avoid doing so for financial reasons. In fact, the ‘strong hands’ can actually profit by buying at cheap prices near the bottom of a market.”

Second is the “weak hands”, who bail at the first sign of trouble, and sustain limited losses, according to Pedersen. In a crisis, that can work out reasonably well.

Finally, there are the “strongest weak hands,” explains Hulbert. They lose the most money. They initially think they have a strong hand and hold on for a while as their losses mount, Hulbert writes, but they eventually realize they aren’t as emotionally and/or financially strong as they thought. They “are forced to sell at or near the bottom,” Pedersen said.

Hulbert writes, “Their outsize losses aren’t the fault of the buy-and-hold approach, the professor says. Instead, the problem is that they failed to appreciate how much patience and fortitude are needed to tolerate a liquidity crisis. Trying and failing leads to greater losses than not trying at all.” Interestingly, Pedersen said he suspects many of the foundations and universities that were hit particularly hard during the crisis were among the strongest weak hands.

The bottom line? “So soon after the gargantuan losses of 2008, of course, it’s not certain that buying and holding will continue to be a viable long-term strategy,” Hulbert says. “It may take many years to know. But Professor Pedersen says it is already clear, for strategic reasons, that it’s better to hold securities for a very long time or to sell rapidly when conditions worsen — but not to equivocate.”