Trading Frequency

1998/8/24 - I still maintain the goal for value investors should be short-term holds, not long-term holds. The more trades, the more times you are realizing value within a reasonable time frame (ie your stocks are moving up rapidly rather than slowly). This may be my year of fewest trades, and it may turn out to my worst.

I told you I had ten thousand dollars when I was twenty, and my margin on that Sugar deal was over ten thousand. But I didn't always win. My plan of trading was sound enough and won oftener than it lost. If I had stuck to it I'd have been right perhaps as often as seven out of ten times. In fact, I always made money when I was sure I was right before I began. What beat me was not having brains enough to stick to my own game--that is, to play the market only when I was satisfied that precedents favored my play. There is a time for all things, but I didn't know it. And that is precisely what beats so many men in Wall Street who are very far from being in the main sucker class. There is the plain fool, who does the wrong thing at all times everywhere, but there is the Wall Street fool, who thinks he must trade all the time. No man can always have adequate reasons for buying or selling stocks daily--or sufficient knowledge to make his play an intelligent play. [p21, beginning of Chapter 2]