Are you looking for commitment or quickies (with your investments)?
I've heard many sayings comparing investing to relationships like "Don't get married to a stock" or "I don't even hold my wife overnight" (credit to Mike from greatstockpix.com for that one).
The truth is there are many different types of people out there with different desires at different stages of their lives, and investing should be treated no differently.
Some people are built for adrenaline rushes and risk, while others need stability and safety. Your needs and personality can also evolve over time. When you are young you should be gaining lots of new experiences, finding out what you want, being a bit adventurous and wild, time is on your side, but if the right one comes along then sure by all means take it and hold on to it. By contrast when you're older that unpredictability starts to be more of a concern than an excitement, you don't want to start over, and you may get to the point where you're just no longer able to or as effective at getting those quick rushes as you once were.
You will hear many people argue for their personal preference. Many say buy and hold is the simplest and best way to grow your money, others argue you will never get rich earning returns of a few percent per year. Again there is no simple solution. I combine both long-term investments and active investing and the truth is they can both be equally challenging.
The common mantra is that most active investors underperform the market, which is true. It is not easy to come to work in the markets each day not knowing if you will make or lose large sums of money. I can't tell you how many unpaid hours I have put into studying, learning, researching, reflecting and preparing for those few moments each day of actual trading. In relationship terms that unattached life brings the thrill and challenge of meeting someone knew. Hitting it off is exhilarating and a great story to tell all your friends, but what about all those times you strike out, and all that time spent alone without any companionship? For active investors or day traders it sounds great and feels amazing if you make a big, profitable trade in a matter of minutes, but what about those times you lose money, or all of those hours you put in without any monetary reward. Meanwhile all of your friends in long-term buy and hold relationships are just relaxing at home, slowly riding their portfolios higher with the general long-term market trend.
On the other hand, I would argue that most long-term investors don't outperform the markets either. Most pay others to do a lot of the work so they don't have to, and there is always the challenge of picking the right stocks to hold on to. Even if you are committed, sometimes things don't work out. I've traded almost any stock you can think of and held many that have gone to zero, just like many relationships, so no matter what my initial intent, life often has other plans. Even when you find something great, sometimes things still just don't work out. I owned Netflix when everybody said it was a terrible company, a bad investment, and going nowhere, yet since I've sold it is up roughly 2000%. Often you can find a great match as well, but they don't want you back. Many companies I've wanted to invest in weren't public yet then by the time they were the valuation was out of my comfort level. Then when they do go public as a small retail investor forget trying to get a piece of that IPO, you'd have better luck picking up a model off a runway in Milan. You can add Google, Tesla, Visa and Canada Goose to the list of companies I wanted to invest in long before their valuations skyrocketed, but circumstances prevented it. There is always opportunity cost with any choice we make. Choosing to be with one person means we are missing out on possibilities to be with others. The same goes for investing, no matter how much money we have our financial resources are limited, so we have to pick and choose the best uses for our capital. I wish I still had Netflix, Google, Tesla, Visa and dozens more companies before they went public, but I couldn't juggle them all at that point in my life.
Not everyone is built for that risky, adventurous lifestyle. Most won't be good at it and although you can get lucky once in a while, you'll probably strike out more often than not. On the other hand long-term commitments aren't easy either, you can't just sit back thinking you're locked-in for life or else they will fail as well. You have to be aware of needs, evolve, adapt, change and tweak over time.
In the end I think a bit of balance is always a good thing. Some stability, safety and predictability is always reassuring during the tough times. Yet we can't just give up and live life on cruise control, we all still need a little excitement, something to motivate us, some special moments that give us that little bit extra out of life.
Day Trade