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Strategies & Market Trends : Gorilla and King Portfolio Candidates

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To: tekboy who wrote (25254)	5/24/2000 11:25:00 AM
From: rushnomore	Read Replies (3) of 54805

Holding vs. trading I now realize that I overlooked another obvious factor that stacks the deck even further against trading, which is the greater number of decisions required. Let's assume that because of excellent skills in their respective areas Tortoise A and Trader B both have a .75 chance of being right whenever they do something. And let's further assume that they are operating in tax-exempt accounts. It's still not likely to be close, because each Tortoise operation requires one choice while each Trader operation requires two--with a resultant success probability of .56 as opposed to .75. tekboy: That was an interesting post, particularly the part about the cumulative probability of making multiple correct buy/sell decisions. But every day the LTB&H investor sees his/her strategic decision (to hold) result in either a gain or a loss. And the cumulative effect of those results is what gives the investor his/her long term gain or loss. So I don't think that this holding vs. trading argument can be solved by just multiplying decision probabilities. BWDIK.

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