Steve: Your buy and hold strategy is good for growing stock, but the return of just 3125% in thirty years is just too small !!!!
I have two strategies , which will make substantial profit in 30 years.
1) Use earned money to make money for you.
Always keep 25% margin,so you add up your shares whenever there is
a dip. but the margin is always less maintained at less than 25%
level.If the stock drop 10%, you sell of the first 15% of your holdings to make sure a margin call will never hit you, then every
10% drop on the stock , you sell 12.5% of your holdings. When the stock bounds back, you buy back the shares you sold.When the tock continues appreciated, you add up your shares from time to time whenever there is a dip.
2) 5% profit per month strategy, and fully invested,also 25% margin
with this strategy, your total return per month of your capital
is :
1000 x 0.05 / 750 =6.67%
each year with 12 months fully investment:
The annual profit margin is : (1.0667)**12 - 1=117%
with 28% capital tax, your annual profit after tax
will be : 117 % * (1 - 26%) = 84.24 %
With fully investment strategy, the total capital available
for investment will be 184.24% of the previous year.
To do this coutinuously for 30 years, at the end of the
thirty years, your total capital will be :1.8424 ** 12=
91520366 times of the first year. Let say you do not hit
the 5% target every month, by doing this, your can still
hit the magic number of 1000.
With 5% target per month, it means 1.5% per week in average, or
0.3% per day. Just review every stock on board, you will see
most stock fluctuate up/down more than 0.5% everyday. Of course
you can switch from stock to stock during the 7.5 hours of each
trading day to max your gains. I know someone just hold the stock
for not more than 1 hour in each trading day. This will also reduce your chance of hitting a downgrade comment on a special stock by those
analyst, because you do not drive the car on the highway all the time,
this will reduce the risk of having an traffic accident.
Of course you can adjust the monthly profit target from time to time (but I think with 28 trading days, 210 trading hours per month, 5%
per month is a reasonable target)depending whether you are aggresive or conservative.
With buy and hold strategy, you gain nothing in the past four months on CPQ, but the stock still fluctuate a lot. SO, if you have set up a goal to make $0.5 per day in the past four months on CPQ with its daily fluctuation , you have already made $56 of profit on each share
of CPQ stock. Now, with buy and hold, you gain nothing !!!!!!!!!!
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