...but knowing why you are making it.
A friend was telling us he made 45% last year by holding, without trading. The fact you made a lot of money without knowing why is dangerous.
I think it is much better do make little money and knowing why you are making it. Is it dividend re-investment? Is it trading? Is it momentum strategy? Is it sectors and business cycles? Is it market timing?
Knowing why you are making money (and you have to dig deep into yourself to find the reason) is important because it allows you to improve your strategy.
Buy-and-hold clearly does not work. It has been painfully proven a disaster in the last 12 years. Bogle of Vanguard was pushing the index fund idea with a lot of fanfare.
Now you know. Now you know you have to change. You have to answer to why you are making money. The next question is -- how can I improve?
The important issue is to know why -- why you are making it.
George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
Ranked Top Market Timer in 2009 and 2010 by Timer Digest
To find out more about my in depth views of the markets and my strategy just visit our website https://www.peterdag.com/ where you can subscribe to The Peter Dag Portfolio. You can also call me at 1-800-833-2782 to discuss your specific money management needs.
I will be happy to speak to your investment group on how the business cycle impacts investment strategies and the choice of asset classes.
Disclaimer. No material here constitutes "investment advice" nor is it a recommendation to buy or sell any financial instrument. Actions you undertake as a consequence of any analysis, opinion or advertisement on this site are your sole responsibility.
1 comment:
Totally agree with you – it’s important to know why you’re making money. As you said, it allows to improve your strategy and as a result, you can make more. It’s kinda strange if you make a lot of money and you don’t understand why. When you know exactly how much you make and why you’re making it, you can make plans and learn how to boost your income. Nobody wants to be in need and use loan service with no credit checks but it’s important to have the strategy to raise your capital.
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