Edward Jones says "constantly buying and selling stocks doesn't make sense."
- Thread starter her209
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- Oct 28, 1999
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Depends completely on the investor and what their definition of "constantly buying and selling".
I'm happy buying in, taking a 10% gain, and getting out in 3 months time. Is that constant buying and selling?
Also depends on your leverage and how much you are eating in commissions. It's not something that you can paint with the same brush.
There was a guy on here that wanted to do 4-5 trades *a day* with only a $5,000 buy in. That's too much buying and selling for the leverage. If you were doing that with $50,000 you'd be tossing around enough to make up for the commissions.
I'm happy buying in, taking a 10% gain, and getting out in 3 months time. Is that constant buying and selling?
Also depends on your leverage and how much you are eating in commissions. It's not something that you can paint with the same brush.
There was a guy on here that wanted to do 4-5 trades *a day* with only a $5,000 buy in. That's too much buying and selling for the leverage. If you were doing that with $50,000 you'd be tossing around enough to make up for the commissions.
iversonyin
Diamond Member
- Aug 12, 2004
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Nope. You buy when you have a reason, you sell when the reason for buying is gone.
Rather that reason lasted 1 day, 1 week, 1 quarter.
If the stock run 20% within 2 weeks. I be selling it for sure, too fat, too fast. It'll come back down at a nice price for you to get back in.
And Edward Jones jus want your business!!
Rather that reason lasted 1 day, 1 week, 1 quarter.
If the stock run 20% within 2 weeks. I be selling it for sure, too fat, too fast. It'll come back down at a nice price for you to get back in.
And Edward Jones jus want your business!!
iversonyin
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With commission as cheap as $3/ trade.(www.sogoinvest.com) You don't take a rip on buying and selling like you use to.(when brokers use to charge $30+ a trade!)
Tax should be never be the reason you buy or sell stocks. I rather take the gain and pay the taxman and sit in a trade that turn out to be not as good!
Its better to be rich to pay tax then poor to get tax credit- make sense? Unless you are so sure about the trade, I would definitely take some off the table. Paying tax is not such a bad thing!
- Oct 28, 1999
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For *a lot* of arm chair traders, they do the worst things imaginable. They buy in when the stock is at an all time high, they only throw a small amount of money at it, and then they freak out when it drops 2% in one day and sell.
They are out their 2% as well as their commissions.
Do that a couple times over and you are out a decent chunk of money.
*A lot* of people have no reason to "trade". They just need to hit up good old Vanguard and buy into an index fund and let it ride.
<----- Worked at a major online broker and dealt with these people daily.
Since I believe the markets are at least semi-strong efficient (if not strong form efficient), it stands to reason that nobody will outperform the market in the long run given equal risk assumptions. Based on that, frequent buying / selling to try and make quick profits is stupid -- you won't outperform the market in the long run, but you are paying more in comissions than someone who is not churning. Edward Jones is correct in this case.
<queue up all the "but I doubled my money in three months!" idiots>
No matter what people say, I've never seen a legitimate study show that anyone has beat the market over a long term when the risk levels are accounted for.
<queue up all the "but I doubled my money in three months!" idiots>
No matter what people say, I've never seen a legitimate study show that anyone has beat the market over a long term when the risk levels are accounted for.
Zenmervolt
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iversonyin
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Of course not, because most people don't research. How would you account for risk vs. reward? I'm just wondering. Do you look at beta? do you look at standard deviation?
Most mutual fund managers couldn't outperform because of the large amount of money they manage. But I think a retail investor that is knowledgable can beat the market consistently given that they have a risk management strategy and do their research.
To give in to index fund or mutual fund or NOT investing is just a lazy way of saying "its too hard, I quit". Consider index fund charge expense and you pay tax, your return wouldn't even be close to the index.
Fingolfin269
Lifer
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iversonyin
Diamond Member
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Is your average investor a dumb*ss or an reasonable one that is knowledgeable?
Investor 1:
Heard some tips from a coworker to buy some BIDU. Log in his online broker account and load his whole IRA account in.
Investor 2:
Spend times doing research, reading article, comparing ratios. And reading books and magazine about trading/investing. - might not be very profitable/good, but he is knowledgeble.
Fingolfin269
Lifer
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Do you really want me to answer that? Have you ever met an 'average' investor? (This includes anyone who can choose what to do with funds such as 401k)
Fingolfin269
Lifer
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iversonyin
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FelixDeCat
Lifer
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They don't all go broke. A very, very small amount make lots of money (and get highly publicized)
However, I think it doesn't make sense because buying and selling individual stocks will bring you the same expected return as holding an index of all the stocks, but with much more risk.
That is, unless you think for some reason that you know the market better than all the active fund managers who do it for a living...working 80 hour weeks and still losing to the market most of the time.
iversonyin
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ultimatebob
Lifer
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Day trading stocks doesn't make all that much sense for most people, but neither does hiring some overpaid financial consultant who's going to eat up all your money in commissions and account management fees.
A well researched and diversified portfolio with a small number (6 to 12) of stocks is still the best way to go.
A well researched and diversified portfolio with a small number (6 to 12) of stocks is still the best way to go.
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