Buy and Sell vs Long Term Hold:
I've followed both strategies, been an investor and been a maniac day trader. I've come to the conclusion that the strategy most likely to make money without ulcers is a combination. Find a few good companies, ones you can sleep well owning, even if the market is going down. As long as you trust them, always own some shares. If the price runs up and you start getting uncomfortable, sell some shares, but always keep some. If the price drops, buy more, but always keep a cash reserve (or margin reserve if you want). So you're always invested and assuming you picked good companies, you'll benefit from any run-up while avoiding disastrous crashes.
I personally favor a quartile approach. Figure out the maximum amount you would invest in a particular stock. Divide by 4. If the price shoots up, reduce holding to 1/4 of max. If the price drops, go to 1/2, then 3/4, then, very rarely, 1, if the price really tanks. I also keep some money aside for speculative purposes (looking for cure for cancer companies, shorting hyped up companies, etc).
Anybody got any comments on this approach? Anybody do anything similar?
Haz |
