As we
come to the end of the year it always is a good time to access our progress
with our investment objectives. Not only
should we look at how much our investments have grown (luck or skill) or
haven’t grown, but we need to look at our investment philosophy and see if it
is helping us meet our objectives and goals toward retiring someday.
As
investors we are bombarded with different messages some saying the old
philosophy of “Buy and Hold is dead”, with others telling us that timing the
market is a fools errand. In between
these two extremes lie many areas of investment behavior.
For
those of us who started or grew up with the buy and hold philosophy, becoming a
very active investor took a lot of courage and a leap of faith as we began to execute
many different trades trying to stay ahead of the game. As an active trader one must be very nimble,
visionary, well read and versed, and at times just down right lucky. On the other hand, as some have experienced
twice during the last decade, if one sits on gains long enough a market
downturn can soon take them all away.
Having
prepared taxes for many years my bias tells me that of the very active traders
that I have become acquainted with, all have lost money on their short term
operations, and the only real gains that these investors/traders make is with
their long term holdings. The only money
these individuals made was for their brokers as these active traders literally
make hundreds if not thousands of dollars for their respective brokers a year.
