Long term investment strategy (Buy, hold but don’t forget)

Let’s look at it from the perspective of those who don’t buy and hold too often.

1.1×1.1×1.1 = 1.331 (33% returns)

This means if you can get three trades of 10% each in 365 days (whole year). You will get a 33% return on your capital. It’s easy to find 10% trades than 100%. You can easily find 10% trades with the help of technical or fundamental approaches.

Six 10% gains compounded will yield almost double the total return of one 40% winner.
The amount of turnover is directly related to the average gains and losses and your batting average. If you’re turning your portfolio over very rapidly, you can have smaller gains and losses and a lower win/loss ratio than if you’re turning it over less.

This is the same concept as a retailer who sells a low-priced or low-margin product versus another who sells a higher ticket item with less inventory turnover. The lower-priced merchandise may produce more profit than the higher-priced goods if the retailer can make up for the profit difference through higher sales volume.