Hi Thomas,
I'm not sure whether we are agreeing or disagreeing at this point :)
You mention "accumulating at the beginning" and "selling at the end" versus "moving in and out". I don't see an unambiguous distinction.
If you mean buying a stock, selling it, buying it again and selling it again... well we may or may not be agreeing.
The economic fortunes of companies sometimes rise then fade, only to rise again and fade again. So I don't think we should prejudice an investment method like kids playing tag: "sell stock, no buy back"...???... no. A company may go through the entire Gorilla cycle, thereafter to languish for a while. Should we continue to hold when they cease to exhibit GG characteristics, in the hopes that a second tornado materializes? For how long? What if some time after we sell, another tornado materializes unexpectedly? Do we refuse to ride merely because we had already sold? I'd have a hard time putting my pride before profit. So I don't see anything fundamentally wrong with buying and selling and buying and selling again. For legitimate reasons.
If you mean sell, buy, sell, buy, sell, buy etc. decoupled from the economic foundations of the business... based perhaps on chart formations or investor psychology... well yes. I agree. That's a hard game to win at and most folks who try tend to go broke very quickly.
And if you mean that profit is subordinate to holding time in an investment hierarchy of principles... well then we disagree strenuously. Because I see the latter as only one of several theoretical means to maximize the former.
So I think we agree. Just that we are tripping over semantics.
It is confusing because you dismiss the importance of "timing" the purchase point, only to make reference to time as a criteria for purchasing?? "... as long as that time was four or five years ago..." Which is timing. Isn't it?
It's not appropriate to say "as long as you bought more than xx years ago you would have done well". As if to imply that if you buy at any time that as long as you hold for four years you will do well. Picking the right time to buy is irrelevant. IMHO. Picking the right time to sell is irrelevant too. Neither have anything to do with time.
So to your question: "does it matter a lot exactly when it was that one bought". The answer is "no, of course not". What does matter is the price at which one bought, relative to the price at which one sells. In fact, that's the only thing that matters.
Perhaps I could clarify my position if I said I don't advocate market timing at all. I just advocate stock pricing. Which is a big, big, big difference.
I will sell any company's stock I hold if the market pushes it far in excess of the economic value that it can possibly hope to attract. No matter how "wonderful" the company. If you are offered a price in excess of what you think is likely in the future, would you hold, or sell? Me, I'd sell. I can't imagine saying "I think I'll hold on to this so I can sell it later at a lower price".
So while I generally buy with the expectation of holding on for a long time and for a large gain, I contemplate good reasons for selling "ahead of time".
But what about the buy decision?
I will not purchase a stock that is priced excessively high no matter how much command the company has on the marketplace. Particularly if the marketplace that it commands isn't big enough to justify economic returns to match the share price. At least, not unless I plan to flip it to some greater fool. And that is as dangerous a game to play for a person who is LTBH as intraday trading is for someone who speculates. Because in greater fool investing, the last one out loses.
John. |
