Is it better to buy and sell stocks or hold? Six reasons why you are better off holding stocks long term instead of trading. I am not a licensed investment advisor and this article is not investment advice.
Have you ever wondered if it’s better to trade stocks rather than hold long term?
In hindsight, it always seems obvious that you could have traded a stock for a quick gain.
Rather than holding stocks through the ups and downs, why not just trade for quick gains?
It would be easy, right?
Wrong.
In this article, I will look at why it’s better to hold stocks long term instead of attempting to time the market.
Let’s get started.
Is It Better To Buy And Sell Stocks Or Hold?
In short, it is better to hold stocks than attempt to buy and sell for quick gains.
Of course, it depends on your investment style and what kind of investor you are.
But for a huge percentage of people, it’s more profitable to hold stocks for the long term.
Here are a few reasons why:
Is It Better To Buy And Sell Stocks Or Hold? Six Reasons To Hold
1. None Of The Richest People In The World Are Traders
If you look up the list of the richest people in the world, none of them are traders.
They all built their fortunes through holding stocks or holding their company stock over the long term.
Musk, Bezos, Gates, Zuckerberg, and Buffet all held assets over the long term to grow their wealth.
I mean, correct me if I’m wrong, but there isn’t a single trader on the Forbes billionaire list.
2. If Trading Truly Worked Like Trading Gurus Claim, They Would Be Warren Buffett
We’ve all seen advertisements from trading gurus claiming to make ridiculous returns.
Their ads pop up on Youtube and on social media promoting their guaranteed strategies to earn insanely high returns every year.
Here’s the thing — if they truly earned the returns they claim to, they would be Warren Buffett.
If there really is a proven strategy to generate 300% per year, then traders would become billionaires too.
But they don’t because it doesn’t work.
Even if you could earn 25% per year for the next two decades, you would end up being one of the best investors of all time.
3. Traders Sell Courses To Make Money
You really have to ask yourself this question:
If day trading is such a profitable strategy, why would day traders take the time to sell courses on it?
I mean, selling a course about trading would be a waste of time if they had a proven strategy to earn 300% per year.
You don’t see Warren Buffett selling courses on how to invest because that would be a waste of his time. He can make far more money buying and holding stocks than he can from selling a course.
4. If It Sounds Too Good To Be True, It Usually Is
Once you have enough experience in life, you know that things that sound too good to be true usually are.
There is no free lunch.
The same goes for buying and selling stocks. If you think you are going to get rich by trading stocks, you’re probably dreaming.
To be a successful trader, you have to beat the market or it’s a waste of your time. If you can’t beat the S&P 500 by trading, you are better off owning the S&P 500.
And realistically, 90% of investment pros fail to beat the market.
So by attempting to beat the market by trading, what you are really saying is that you are better than 90% of investment professionals.
Sorry to burst your bubble, but it’s likely that you are better off owning the S&P 500.
5. You Don’t Have Time To Trade
Another reason why it’s better to hold stocks as opposed to trading is that trading takes too much time.
You have to prepare every day you trade. You need to be aware of what is happening in the markets, and you need to have the time to execute your trading strategy.
Frankly, you likely don’t have the time because you probably have to work a full-time job. Otherwise, if you had enough money to not work, you wouldn’t be looking to trade stocks.
You would hold stocks and live off dividends and capital gains.
6. Trading Is Psychologically Draining
In truth, most people are not even psychologically strong enough to hold less risky stocks through the ups and downs of the market.
Hence why they need financial advisors to guide them and talk them out of selling.
If you can’t hold a diversified portfolio of stocks, you most certainly will not have the mental toughness to trade in and out of stocks.
You will panic and fail to stick to your strategy. This will lead to losing money.
Is It Better To Buy And Sell Stocks Or Hold?
Ultimately, it’s better to hold stocks for the long term rather than try to trade.
If trading truly was a better strategy, traders wouldn’t need to sell courses and more of them would be billionaires.
In truth, trading is what people do when they want to get rich quick and they don’t have the patience to invest.
If you are not a patient person and you need a thrilling way to make money fast, you should start a business.
Frankly, you have a much better chance at being successful with starting a business than trading.
And you could still invest in the S&P 500 in the meantime and beat 90% of the investment pros.
In conclusion, it is undoubtedly better to hold stocks than to trade them.
Related Articles On Investing Vs Trading
Investor vs Trader — What’s The Difference And Which Is Right For You?
Types Of Investors In The Stock Market
Best Investors Of All Time — The 10 Greatest Investors Ever (Historical and Modern)
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