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by newt0311
6449 days ago
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Number 1 is idiotic. Historically, investors who hold shares for more than 6 months get 9 times the returns of investors who churn on a short term basis. Furthermore, there is no way to predict how stocks will behave in the short term. In the long term, we can be reasonably certain that they will appreciate. In the short term, we have no idea. Furthermore, if you are not an institutional investors, federal income taxes of ~35%, and stockbroker fees will absolutely obliterate you and if you are a institutional investor, you have too much money to be able to day trade. The only people who ever try #1 are the ones who have no clue what they are doing and usually end up broke. They need to read The Intelligent Investor by Graham. |
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The second route also doesn't work real well for most small investors that don't have a team to constantly analyze what are the best long term holds. My point is simply that I do listen to Buffet's advice and haven't disagreed with him. Its just that most cannot play the game in the same way he can.
Most small investors can only afford to allow large companies to manage a portfolio for them (normal 401k fund management companies). Look at the current balance sheet of these folks. They are destroyed. The fund companies didn't take care of them. Have you heard of any fund company that sent messages to their small 401k customers telling them "hey, you need to redistribute your portfolio NOW!!! Its what Buffet is doing. Then in a year or so, we'll take all that cash we switched you into and buy stocks again when the market is low". Hell no. I'm not saying the management companies are completely out of line for not taking care of the little guy. What I am saying is the little guy can't ever expect that kind of treatment. It all means that only a few get to actually partake in Buffet's wisdom.