The mentor method is the best method for most: Hooking up with a current winner and adding value is the way to go, if you can. Develop personal relationships with winners. (Paid gurus-for-hire rarely works out) "Be around people whose behaviors are better than yours and you will drift in thar direction," Warren Buffett. * I am encouraging of what you are trying to do because I don't see you walking away from trading; don't see you making it on your own-- and trying to funderstand a mentor and be around current winners is a good plan.
I lke most of your posts but disagree here. Being long Berkshire Hathaway or low fee ETF's have done OK over 40 year periods and figures to be better than (for most people) day trading, especially in a tax efficient retirement account. *certainly a lower wipe out risk for most people.
Yeah but some people dont just want to park money in an account buying and holding stocks over 40 years. Some of us want to be active with our money right now and eventually move to passive income. So you cannot compare daytraders to B&H time lines of 40 years.
I have no argument for those of this mindset if they understand both themselves and The Game well. A small number of skilfull active traders will do extremely well: Jim Simons, Stanley Druckenmiller and Blair Hull took their early trading experiences and built empires. The early SOES Bandits made lots and lots of money. Most people, however, will be financially better off buying Berkshire or a low cost ETF, especially in a tax efficient account, and adding and holding for 40 years. I wish only the best for those who are active traders but you better be "levels above" because most will fail.
Well I don't have to match Simons or Hull to make good money actively trading. That is the key I believe. As long as my account is growing and making money more than 10-15% net a year then it is well invested. Funds for retirement are already parked in the stock market so no one should be trading 100% of their funds anyway so we all have a portion of B&H in our portfolio anyway.
Brilliant. A "2+20" guy, one "5+44" guy and a MMer who made 5% wide markets in the 80s. Just active traders.
For the average person, sure. Past 90 years the S&P has done 9.8% annualized apparently. All daytraders aim for higher returns and some succeed. I had a similar debate with a family member. He pointed out the average success rate and I replied with "I don't care about the average, I can do more and do it better". If it's arrogance or intelligence depends on the results. So far I've outperformed B&H. I can't speak for other people because I have no way of knowing how much effort they put into it. You're also applying bias here as it's easier to recommend long-term investing after the markets have had a good run. In early 2009 barely anyone would've agreed with you and you might have thought differently as well. Reminds me of the documentaries from the tech bubble when people were making fortunes in weeks and laughing about buy and hold. A year later many were bankrupt. There's also absolutely no point in comparing to Berkshire. They use OPM to make these returns. Can't be compared to an at home trader or investor, as others have already pointed out.
Buy & hold for building wealth is but a dream built on fantasy. The majority of shares (maybe +80%) for example on the ASX are just crappy underperforming jerky (random) stocks. I would imagine the same type % of underperforming shares would be found on most other stock exchanges. None of the major indexes are buy and hold indexes, they are all refreshed approx. every 3-6 months. If you were to list all shares on for example nyse and filter them into those which consistently trended, didn't suffer major drawdowns and gave for the most part returns of maybe 40% pa, and were not overly volatile (forever knocking out your stops) you would discover the majority would not make the grade. So buy & hold is for the most part wishful thinking, it would only work if one were very skilled at picking the creme of the creme stocks. That's rather difficult for most lay people as they lack the tools and experience, let's say you chose 80% consistent winners, the other 20% which proved in hindsight to be the archilles heel and these would have a major effect on your profits.