selling high to buy again low??

Sorry, this is not so much an OBJ post as it is a general one but OBJ posts have sparked this question in my head.

It seems to me that many investors who like the company are focused on buying and selling this stock over and over, trying to buy in at lows and sell at highs, which they are probably doing very successfully. I often read people complimenting each other on getting out at a weekly high and managing to get back in at another low a week or two later. But have those investors ever done the maths on whether they are making less money over time when compared to just holding the stock (i.e. not constantly buying at lows and selling at highs)? Remember you are taxed on the whole capital gain each time you sell when you hold a stock for less than 12 months, in addition to being charged commissions on every purchase and sale.

I am no mathematician but I've run basic spreadsheets on such scenarios, but instead assumed sales after holding for longer than 12 months when you are only taxed on half the capital gain (instead of the whole capital gain if you hold for less than 12 months), and even then you only come out ahead over time (after good growth in a stock) if you manage to sell and buy back in at more than a 20% discount from what you sold at. So if you plan to sell high and buy back into the same stock at a subsequent low, you would want to be certain you will be able to buy back in at roughly a 20% discount at minimum to come out ahead over time - that is if you hold for longer than 12 months each time. You would need a far higher discount when buying back in if your holding period is less than 12 months as tax doubles - I haven't bothered running a spreadsheet for that scenario.

Moral of the story: If you believe in the growth of a stock and often attempt to sell high and buy back in low along the way, be sure you have compared the scenarios to just holding over time as you will find you were far better off just holding without copping all the frictional costs (i.e. extra taxes and commissions) along the way.

This is definately not advice and is simply my opinion which may be wrong, so do your own research and calculations. I just wanted to enlighten anyone who is constantly selling and buying the same stock as it grows and fluctuates over time.