Retirefund is for sale!

Saturday, July 4, 2009

Investing long term OR trading short term! Do you really need to ask?

WASHINGTON - MARCH 13:  Warren Buffett, chairm...Image by Getty Images via Daylife

Businessweek recently asked on it's blog if investing long term in the stock market is still a good strategy for your retirefund, or if a short term "trading" system might be more beneficial. Do you really need to ask this question?

Let's answer that with two more questions shall we! How many of you timed last years market plunge? How many of you "timed" this springs bounce? I thought so! If you didn't time either of these obvious opportunities, then why would you even consider trading short term? This is not to say that you shouldn't sell stocks. That is how you book real profit. However, if you buy a classic car at an auction, you don't sell it at the same auction. You bought it because it accumulates value, and that takes time.

Long term strategic investing in the stock market has returned the most value to investors than any other store of value over the past 100 years. It will continue to do so over the next 100 years. Why? To draw a simple analogy, the stock market for investors, is what the ocean is to sailors. If it empties, it won't matter what ship you have your family in because every boat will be on dry land. In investment terms, no other investment will stay afloat if the market is gone.

That is why you hear terms such as "a rising tide floats all boats" from investment gurus. It is the same analogy used when Warren Buffett says " when the tide goes out, you can see who has been swimming naked"!

Now let's draw another simple analogy for "today's market"! Currently the tide is very low and most boats are aground. If you pick the sturdiest, fastest boats from the ones that are currently stuck on the sandbars, you will definitely sail away and win the race when the tide comes in, and make no mistake. It will come in. It always does!




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