If you basically believe in the fundamentas of a stock, but bail...

If you basically believe in the fundamentas of a stock, but bail on a correction, you are possibly thinking that you will pick up the stock again at a lower price in a few weeks ... a good plan.

The problem is (or usually was for me - before I saw the light) that, when that moment finally arrived (that the price was lower and probably at a bottom), I had the money tied up in something else and it would be underwater ... or sometimes I simply forgot to watch. Anyway, the result would mostly be that the next time I bought in, the price would be significantly higher and hte leverage lost. I found it very difficult to get the timing right most of the time.

Over a pretty short time, since I finally abandoned the short term trading approach, my capital has expanded by about 1200% ... and I can see it going a lot higher yet.

In this current resources and energy bull market, which has many years yet to run (I agree whole-heartedly with Siamese on this), provided you have chosen your stocks for sound reasons and as a result of careful research, there is little risk I feel in ignoring the short term market noise and sitting through the inevitable corrections (meanwhile just keeping an eye on your investments to be sure nothing detrimental has occurred in the fundamentals). When finally the price goes up, you still have all of your leverage and it is this that makes the big bikkies.

It took me several years to finally believe that buy and hold was the better strategy ... but it is paying off for me.

It would be interesting to hear other people's takes on this question: short term trading vs. buy and hold.

Cheers,

Tez

I hold RAUO

Nothing I write should be taken as investment advice. It is nothing more than my own opinion and is very debatable.