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Online Share Trading

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Buy and Hold, the Least Worst Option?

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40 REPLIES 40
HateGauteng
Super Contributor
More incesant blab, couldn't manage reading the whole thing. Just tell em to trade the price.
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Werner_1
Super Contributor
In my opinion long term is the best, buy quality assets as reduced prices and hold as dividend income grows as well as capital, this method has the lowest trading, tax and time costs, opening your time up to create other income generating sources through work, creating ventures, or whatever you want, if you have enough money then you can go to the beach and surf the whole day... with no worries your trades will be stopped out etc... compounding will take care of your portfolio and surprise you beyond your wildest dreams, but you must again be patient...
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theyoungster
Super Contributor
I agree with werner, as werner and myself are in our twenties we have time on our hands, one should see the invested ammount as buying a business,, and never selling the shares you own!!! as the dividend grows every year it will eventually overcome the capital you invested over a longer period example: SBK shares 21 years ago where at R1.33/share SBK recently payed out a dividend of >R4/share, thus the dividend is roughly 3X the capital 20 years ago...and obv you'll have emourmous capital growth....time is an investors best friend...buy businesses that you can still see around in 20-30 years time...i can see my mom shopping at PIK & WHL,SHP twenty years from now...and they move there prices of the items they retai according to inflation so you'll always be protected...think about investing logically...
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NJ_1
Frequent Contributor
That's all good and well for what is sensible, but for traders it will never replace the rush of making 20+% in a few days or less, on trades that they put together from nothing except their own knowledge and experience.
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AJT
Super Contributor
I view the argument that there is room for both types of trading. Long term needs to form the foundation, as this will sustain you in the long term investing and I agree with the notion of buying companies you can see in business in 20 years time. Trading I view as a great way to get extra cash for that holiday that your regular 9 to 5 cannot fund. Profits made can also be used to invest in the long term portfolio - all of this assumes of course that you make a profit...
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Not applicable
IMO, every trader, be they professional, wannabe professional, day trader, part time trader, or just generally what many refer to themselves as "a trader" they should have two stratergies. Investment account for wealth building=70% of capital and a traders/speculators (gamblers) account for scratching the itch of risky money making and getting that "get rich quick" bug sorted. The profits from this account, if any, should be used ofr whatever they decide to do. Spend, re-invest, re-trade etc....
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SimonPB
Valued Contributor
two comments, if trading is about fun, then you are losing money over time .. secondly if the vast majority of people lose money trading, surely the intelligent person ignores it and goes for investing ??
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Not applicable
Now SImon, we could make many comments on trading, intelligence and investing but lets rather leave it be ;-) Did you get my email suggestion?
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SimonPB
Valued Contributor
I see it, but only just got in so going through emails ..
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NJ_1
Frequent Contributor
I don't see why an intelligent person would have to ignore trading, simply because the majority of traders don't make money. If some traders do make money, why should an intelligent person not believe that he/she can be or become one of them? Having said that, I don't question the validity of having an holistic strategy and a portfolio that aims to balance risk. Like CPS and others, I feel that a trading account can be a useful and very lucrative part of overall investment strategy.
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SimonPB
Valued Contributor
if the reality is that ony 1 in 20 succeed it doesn't matter how you stack it .. reality is you are way more likelyy to be one of the 19 then the 1 .. in truth this points to the bigger issue, a lack of understanding of risk ..
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NJ_1
Frequent Contributor
Well, if it's simply a question of managing risk, then, if the odds of succeeding is 5%, then the risk of trying to succeed is more than acceptable if you don't spend more than, say, up to 0.5% of your potential investment capital on it. That is, until you are certain that you have become one of the 5% that are succeeding.
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SimonPB
Valued Contributor
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Russ
Super Contributor
The linked article 'Rise of the machines' is also interesting.He clearly favours long term investing over short term trading eg. "Fundamentally Patient As far as most private investors are concerned high frequency trading should be irrelevant most of the time. The miniscule differences in prices that the high frequency trading bots are exploiting will make no difference to longer-term returns and the longer-term is the only perspective from which the private investor has any hope of consistently outperforming. The general inability of the investment industry to think beyond the end of the next quarter means that the long-term investor focused on fundamentals rather than behavioural trading patterns at least has a chance on a playing field slanted in their direction. You can't beat a bunch of supercomputers at their own game but not even a surfeit of supercharged silicon circuits can detect intrinsic value. In truth the value led investor should scarcely need an abacus as long as they're in possession of a full set of digits."
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NJ_1
Frequent Contributor
Why would the intelligent person, who can work that out for him/herself, ignore it then?
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SimonPB
Valued Contributor
because people do not approach it intelligently (regardless of how intelligent they may be), they do not manage/understand the risk .. they do not understand the process .. they in way too much of a hurry .. and then finally they get completely blind sided by what trading really is albout once you get the risk right - psychology ..
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bangbul
Regular Contributor
NJ, i disagree. Trading should not be part of investing strategy.Investing imo have to objectives 1]Capital growth [to by a house etc for cash]2]Income generation [for primary or additional pension] Trading on the other hand is a bussiness[you buy to sell at a profit]. A bussiness need capital, skill & experience to succeed,
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NJ_1
Frequent Contributor
I guess it comes down to what you include in the term "investing" then, because personally I would see buying in to a franchise, like a share in a Wimpy, say, as part of investment. I see any disposal of capital on anything that can increase that capital as investment. It's just semantics.
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Werner_1
Super Contributor
Benjamin Graham's definition of an investment operation: "An investment operation is one which, upon thorough analysis, promises safety of principal and an adequate return. Operations not meeting these requirements are speculative." - So i would say if one blindly goes into some deal that could increase your capital, it is actually not investing but rather speculating...
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