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Buy and Hold, the Least Worst Option?

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theyoungster
Super Contributor
Well if you going to only trade with 0.5% of your capital, what you going to do with the 99.5% of it? better off investing, as most companies payout 2-3% dividends yearly, and obviously if they paying out dividends its profitable and there growth prospects... if you way up the odds, if you using only 0.5% capital trading you need for a portfolio of R100k you'll only be enetering trades of R500 then brokerage will dent that....where as if you just put the full composite R100K into fund like STX40, STXDIV, you'll get dividends and growth, and much lighter on brokerage
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HateGauteng
Super Contributor
Hey . . .Been following the thread and it ties in with one of my long standing observations about humans. . . I've come to realise that only 5% of humans are actually intelligent. The other 95% just tag along. Back in my genetics days, I was considering ways of breeding the 5% and culling the rest! Thanks for providing the figures to back up my observations.
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NJ_1
Frequent Contributor
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NJ_1
Frequent Contributor
I think you're missing the point. It is worth risking your 0.5% (or 1% or 3% - whatever will make it sensible but within acceptable risk levels to trade with) on learning about a risky venture that may collapse, on the one hand (if you are one of the 95%), or, on the other hand, teach you enough to never have to look back (if you are one of the 5%). If you are intelligent enough to get that far, then you're probably also intelligent enough to work out for yourself within a reasonable period, whether you are one of the 5% or the 95%. What I object to, is the idea that "intelligent" people would summarily dismiss trading as an option, simply because most people fail at it. If everyone thought that way, Everest would still be unclimbed.
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Werner_1
Super Contributor
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bangbul
Regular Contributor
Sure, lets call passive & active investing. When you buy shares in the Whimpy & you don't run the place it's passive. In trading you actively run your investment- so your own bussiness. My point? Don't trade with your pension.
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warhippo
Super Contributor
It probably all goes about making money. I have posted this before and again also to remind myself as a longer term investor that there are indirect costs which I/we tend to ignore conveniently. As trader and as long term investors we must remember that money tied up means a potential loss of interest on capitol investment (however small it might be now) and secondly the personal time in monetary value per hour spent by trading - can't work for free
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TOPIX
Regular Contributor
Very little to do with intelligence. Problem is that the 95% of traders who fail see trading as a get rich quick scheme, and they start trading when they are in need of quick capital. That's why they cannot cope psychologically. They will most likely also fail at investing, if they didn't end up in that position because they failed at investing in the first place. The turtle trading case study is a good example, where a group of people with no knowledge of trading were employed to trade (not their own capital). More than 80% of the original turtles were successful at trading - because their performance was measured against how good or not they followed the rules.
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SimonPB
Valued Contributor
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Galuc
Super Contributor
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sponono
Super Contributor
...........except that your comment disregards economic cycles.......
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Major
Regular Contributor
In my 20's I was in a hurry to get rich, so lost a bunch of money trading (but did have some fun and certainly paid some school fees). For the past 6 years I've brought to hold, usually >=3 years and have comfortably beaten by returns from trading, as well as inflation. Get a lovely dividend flow from the investments from which to plan my next holiday, and have much lower costs and stress levels. The older I get, the less of a rush I'm in, and the bigger the profit margins are over time.
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doomsdayza
Super Contributor
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Asher
Regular Contributor
lies, damned lies, and statistics. 9 / 10 businesses fail in the first year. Should everyone give up starting businesses? I like what someone once said (forget who): if 9/10 businesses fail then I start 10 businesses.
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louisg
Super Contributor
That person understands RISK management. If someone offers you a payback of 105c for every coin flip you get right, while you only have to pay 100c for each flip you get wrong.....then the correct strategy would be to make as many bets as possible instead of one single bet (the worst strategy). The more bets you make in this scenario, the closer one gets to a 100% certainty of coming out with a profit.
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louisg
Super Contributor
The JSE has returned 18,2% over the last 20 years. I deduce that the average long term investor has therefore achieved a similar result. Since short term trading is a NEGETIVE return game (fees,spreads, slippage), I can only assume that the average trader has therefore achieved a similar result. Logic dictates that one should rather pursue the former strategy rather than the latter. However, I would also guess that the ELITE TRADER would outperform the ELITE INVESTOR after all costs (including Taxes).
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warhippo
Super Contributor
Yes, Louis your conclusion is probably correct, but are there then not less Elite Traders than Elite Investors as the latter usually buy on fundamentals and has a more conservative and less emotional mindset?.
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louisg
Super Contributor
I reckon one will only achieve elite status once ALL emotion has been taken out of the investors/traders investing/trading process. Are there more elite investors than traders?....I have no idea.
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ACEP_
Regular Contributor
Ya, me neither. BUT........ KIO AC? I'm in.
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doomsdayza
Super Contributor
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