Today we’re gonna have some fun at the expense of the “Buy and Hold” strategy that Wall Street’s “Club” is always advocating. (Meanwhile they’re betting against you by trading stocks that they tell you to “Hold.”)
Hopefully you’ll see why it’s more profitable to trade rather than hold certain stocks.
But first, you need to recognize patterns and trends to make the most of trading.
Let’s start with a stock that flies under the radar…Lowes (LOW).
On 11/16/16 you could have purchased LOW for $65 per share.
Today it’s around $115.
Your buy and hold strategy gives you a gain of 77% (on paper).
However, during that same time period, you could have earned over 144% on the same stock by trading it four times.
Example:
Bot LOW 11/2016 at $65…and sold 05/2017 at $85
Bot LOW 08/2017 at $71…and sold 10/2017 at $82
Bot LOW 11/2017 at $71…and sold 01/2018 at $105
Bot LOW 05/2018 at $82…and sold 09/2018 at $115
Notice that every purchase was higher indicating that the stock is on an upward cycle…the same applies to the selling price.
The bottom line, based on each purchase being 1,000 shares of LOW, is as follows:
The “Buy and Hold” strategy results in a paper profit of $50,000
Trading the same stock results in a Realized Profit of $94,000.
Which would you prefer?
As the old saying goes: “It’s never a profit (or a loss) until you take it.”
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