Friday, November 19, 2010

Buy and hold is dead?

Buy and hold is dead. I heard people are talking like this a few months back. My opinion is this may be right if you taking a short term perspective. At the current market state, is more easy to trade rather than buy then hold for a long period to realise the "intrinsic value" or "fair value". If you apply trading strategy for last few months, you may sit on handsome profit. People tend to talk louder when they are making good profit. I also have to admit that trading is more appropriate currently. If you traded correctly, making >20% is not a mammoth task, and you are on par with all the investing gurus. There are no reason not to shout about. I have seen enough people or so called "investor" huhaa at bull market but eventually disappear after bear market.

Investing in stock market is a long term business. To survive or making money in stock market is not how much you made in this year alone but consistency of profit you make year after year. All the gurus build their wealth and reputation due to they had achieved a long history of consistent above average profit. Any given year there are sure some "smart alec" is making more money then these gurus, but where are they?

The gurus must sure have some strategy to out last the bull and bear market that is unavoidable. And i am sure that their strategy is not short term oriented, since they are building wealth and furtune over a long duration. I am not against trading, but you have to limit your exposure. Is fine to trade 10-20% of your capital, but dont forget you must also ready for long term cycle of stock market.

To trade or not to trade? Is up to you. Frankly, i spend lesser time in stock market for last couple of months. The reasons are is stock market is high although is not forming bubble yet (my opinion. Contrary to year 2008 the market was traded above 1400. i sold most of my stock) and good buy would not appear now. The other reason is i spend more time in property investment.

5 comments:

  1. 2nd Brother,

    Thank you for sharing with us your opinion. May be you can share with us some of your opinion in property investment as well? Looking forward to hearing from you soon.

    ReplyDelete
  2. Lian Hoe, I am still learning on property investment. Unable to share much. The only thing i can say is property investment is viable if you do it correctly.

    ReplyDelete
  3. Great essay!!!
    Buy and hold is the most dangerous in stock market...

    Thx for sharing....
    Tan 81 introduce the website from his blog....

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