Trade Ideas Blog

Short Term is The New Long Term

Jun 28, 2012

Short Term is The New Long Term

“I speak with retail investors every day and I can tell you that more than ever, they believe that the stock market is a casino for the large and well-connected investors,” said Mitch Goldberg, ClientFirst Strategy in Woodbury, NY. (“Is the Buy & Hold Stock Strategy Officially Dead?” – Yahoo Finance)

The truth of the matter is that those with better information do better. “Buy and Hold” has actually never worked. Yeah that sounds crazy right? Well it happens to be true.  Here is one simple fact of Wall St. that most investors don’t understand. The concept of buy and hold has been taught like religion by people who want to collect fees managing your money. Some money managers are able to do a very good job.  In fact I have a good portion of my assets being managed by professional money managers. My money managers never buy and hold. There is constantly a re-balancing that is taking place where the weak positions are replaced by the strong as new information is digested by the portfolio.

You will hear people say something like, “look at the Dow Jones 30 if you just held those stocks instead of getting in and out you would have been okay.” Well, there are number of issues including the 10 + year stretches where it does nothing or declines. But one of the biggest missed things is the simple fact that stocks are moved in and out of indexes all the time. This happens in the S&P, Dow, and all indexes so you just can’t  just buy stocks and hope for the best. You can buy an index which is different than a stock but buying a stock and just holding is a terrible idea.

So we are back to the casino from the first paragraph. If you know you are in a casino, the best that you can do in one is to have a card counting machine.  A decision assistance engine that tells you when the odds are stacked the most in your favor. That is what we do at Trade Ideas with the OddsMaker. It is literally your own personal card counting machine.  So next time you think about playing a stock in one direction or another at least know what the odds are that you are going to be right. There are no guarantees, but with Trade Ideas and the OddsMaker it is the best you can do with today’s technology.

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