Addi,
The problem is you can't rule anything out. It would be too easy if you could just say "buy and hold" or "never market time" or "dollar cost average" or "buy the dips" or "always take a ten -percent profit and always do a 7% stop loss," "buy good companies regardless of price," "never go on margin," "traders always end up losing," etc. etc. These easy catch phrases are what every public-fleecing pundit tries to coin to make it look like there's an approach that works. The fact is nothing can be counted on to work and everything can be made to work. For instance, people can make money trading. I've been trading pretty manically in my retirement account over the past three years--making several hundred trades--while letting other accounts ride. My trading account is up 60% since February of 2000. On the other hand, putting aside profits I took in 2000 and other profits scattered over the past three years, stuff I've been holding and letting ride in my taxable account and other retirement accounts is down 40 to 75%. Trading isn't inherently bad, buying and holding isn't inherently good or bad; being a bear or a bull isn't inherently good or bad, etc. The market really doesn't care about our approaches and so there's no way to draw comfort from any given investing strategy. When people say "traders always get their heads handed to them eventually," they're engaging in the wishful thinking that there are ways to invest that always work and there are ways to invest that never work. There's no escape from having to make moment-to-moment decisions about what to do with your money and you're better off if you don't foreclose options based on fidelity to a particular approach.
Andy |
