Why buy and hold gain more than trading a stock? Any eg to illustrate?

Hey Anon.

You obviously never tried trading your own money before. Try and trade $10,000 and see if you can follow the plan of go in at $10,000, profit till $80,000 and sell, let's see what your brain does.

Investing or trading is not as easy as it seems. If not, everyone would be a billionaire by now.

The reason why buy and hold is better because of EMOTIONS. Unless you can trade like a robot, then you can go the trading route, but most beginners can't even stick to a simple trading strategy and will start making irrational decisions due to greed and fear.

To really get this illustration, try trading your own money :)

The crux of this problem is in example B, how do you know B will ever fall below the price you sold your initial shares at? Shares tend to go up, all time highs are made everyday. You sold them at $80, but stock B may never go below $80 again, therefore you would have to reenter stock B at say, $90. Therefore you would have been better off just holding the stock in the first place.

If you use examples, it will be distorted. No one can accurately predict the peak and bottom, although that is where traders will want to lean towards.

As I am still learning and grasping of what it means to be a value investor, I also learned quite a bit during this volatile year and will share my perspectives.

When it comes to value investing and buy and hold, I have come to realize its really about long term views.

Mistakes I have made include buying sgx at 7.37, giving up too early at around 9+ in 2019 only to see it go to 10+. I salvaged a bit by buying back again some at 8.3 in 2020, but my cost would average up. If I didn't give up my faith in 2019, it was a 30 cents / 7.37 = 4.1% perpetual bond that would become 32 / 7.37 = 4.3% bond now. Because of me dipping in and out, my cost went up to 7.6, and it become only a 4.2% bond for me. But oh well, 4.2% still better than cpf SA.

Not going to give up my sgx ever again. You know how hard it is to find a 4.2% fixed deposit or ssb now?

Trader.
1) B buy $10 sell @$80. Price fall after that. B feel 😎 he is right.
2) B buy $10 sell @$80. Price conti. to rise. B wait for price drop. Never happened. B feel 😫

Investor
1) A buy $10 rise to $100. No feeling 😑. Price conti. to rocket. No feeling 😑
2) Stock suddenly fall. Shopping time.🤑

The truth is investor dont really just buy & hold. When the price start to fall alot. Investor will actually go on shopping spree, like snatching toilet paper during covid. Investor will hold some cash for these reason.

While stay invested you dont miss the boat. Trader can only trade when market open. Sometime pre-market/post market gap up for no reason. If you are out you will miss the boat.