I think most of us on this thread agree with the above. Those who think they can trade successfully, timing the highs and lows are IMHO doomed to waste a few years until they settle down. Ditto for margin buyers, call buyers, short sellers, etc.
True. At least in my experience I can believe it is true. I don't doubt that somewhere there does exist some excellent traders who do quite well. However, if one is not skilled in that profession we have to continue to believe investing rather than trading is the solution. I also hasten to mention that at the current point in the correction I would make the case that it is too late to sell and holding is the obvious strategy of choice.
Keep in mind that to get huge returns in gorilla stocks like Cisco, Intel, Microsoft, Oracle, Siebel or royalty stocks like EMC, Sun Microsystems, Dell, JDS Uniphase or godzillas like America Online, CMGI (big lizard inncubator) or gorilla/godzilla mix such as Gemstar investors had to only do one thing - not sell. That's right, not sell. As Mike said, that's the difficult part. When profits build up and we see our investments growing and growing and growing and growing due to compounding it takes discipline to not jump off of the growth machine if at times the valuations or growth seems to be 'overdone'.
Of course, I'm talking about taking an initial position at the beginning (except for Intel which I didn't chart back to its IPO) and results are not the same by buying at highs years later. I think this information is important in regards to future gorilla candidates and royalty candidates that we do have the chance to buy at or near the beginning and simply holding for the longer term using the gorilla game basket approach. Now that goes against the thread mantra and I only mention it because it is a strategy within the field manual that some investors might fit into based on age/risk/reward profile. I obviously utilize this strategy, but I also have the majority percentage of my portfolio in core, confirmed gorillas and kings which allows me to invest using both strategies.
Until I see proof, which for some odd reason nobody can offer up to me, that one was able to sell at the highs and buy at the lows along the way to beat the long term returns of these companies I am forced to remain skeptical. Of course some of the examples like Compaq, Yahoo!, AOL or CMGI or other stocks in the short/intermediate term trading scenarios quite possibly could be used to shoot through my examples, but simply pointing out over the longer term (years and years) what these companies have done to date including the recent carnage shows what gorilla gaming, godzilla gaming, royalty gaming is all about. Compare these returns to companies outside of technology games to see the types of returns that are available for long term investing.
I simply use the SI charting device to go back up to 300 months to see what those investors who bought and hold were able to achieve.
Cisco - 141,614%
Oracle - 49,476%
Dell - 48,637%
AOL - 45,925%
Intel - 43,296% (since 1976 alone)
Microsoft - 38,715
CMGI - 30,604%
JDS Uniphase - 29,876%
EMC - 29,233%
Sun - 16,783%
Qualcomm - 6,700%
Compaq - 5,795%
Yahoo! - 4,579%
Cree - 3,290%
Siebel - 2,152%
Gemstar - 688%
Other notable returns for investors since 1976 (not all of these were trading way back then):
Home Depot - 162,945% (since 1982)
Wal-Mart - 90,855% (much more if you go back to 1970)
Disney - 5,529%
Pfizer - 5,217%
GE - 5,039%
Merck - 2,665%
Coke - 2,414%
Citibank - 1,080%
JP Morgan - 665%
General Motors - 351%
Caterpillar- 272%
Long term returns would satisfy me in a portfolio of all of those. Possibly traders were able to best those percentages, but have any of you every seen data proving they were able to best those long term returns by trading? I haven't, but look forward to the day of seeing concrete evidence so I can shut up about it. <ggg>
BB
(Envy of initial investors in Wal-Mart, Home Depot and Cisco....who are enjoying fishing anywhere in the world at the moment) |
