Sunday, February 28, 2010

JUST ASK: 'Is it silly to buy and hold (instead of trading)?'

I have been asked to give my two cents at NextInsight's JUST ASK weekly series. Below is my reply to one of the reader's question:

JUST ASK: 'Is it silly to buy and hold (instead of trading)?'
Written by The NextInsight Team
Saturday, 27 February 2010

In this weekly series titled JUST ASK, we invite readers to send in questions on stock investing, and personal finance. We will ask an expert (or experts) to provide answers. Below is a question from a reader on a topic which must be playing on a lot of investors' minds. It is answered by ghchua, a value investor and a long-term investor who is well-known among some investing websites. His investment holding period is unusually long (for retail investors), which makes his views all the more intriguing. Read on!



Blogger Royston said...

Hey Ghchua,

Interesting article, thanks for sharing. Have been following your blog for quite awhile.

I must say that "buy and hold" vs "buy and sell" is a question i ask myself sometimes as well. Assuming one is able to value a stock decently well, does it not make sense to buy when its undervalued, and sell when its overvalued?

However, i guess one can never be truly certain if a stock/market is undervalued/fairly valued/overvalued. And by making less decisions on when to enter/exit the market, there is less risks of making mistakes in this regard.

6:09 AM  
Blogger ghchua said...

Hi Royston,

Thanks for following my blog! :)

If one have the ability and time to monitor and follow a few stocks stocks closely, then yes, buying when it is undervalued and selling when it is overvalued might work.

The question is having a diversified portfolio like me cannot use the above method. Because I have so many stocks in my portfolio and I cannot afford the time to see whether each stock in my portfolio is overvalued or undervalued at any one time.

So, it is still back to the question of whether you want a focused or diversified method. If you are focused, make sure you guard your portfolio closely as each stock will form a substantial percentage of your holding. Any mistake in your buy/sell decision might affect your portfolio performance quite significantly.

As for me, I have chosen the diversification method.

7:43 AM  
Blogger AK71 said...

Hi ghchua,

Thank you for including my blog in your blogroll. I have included yours in mine as well. :)

All the best in your investments and I will visit often.

4:48 AM  
Blogger ghchua said...

Hi AK71,

Thanks for dropping by! :)

Hope you enjoyed your stay here and thanks for including mine in your blogroll too.

8:12 PM  
Blogger Royston said...

Hi Ghchua,

I've just started a blog on investing as well, care to exchange blogroll?



6:13 PM  
Blogger ghchua said...

Hi Royston,

Sure, all the best in your investment game plan! :)

12:39 AM  
Blogger Royston said...


Great thanks! And look forward to more articles from you! :)


1:04 AM  
Blogger ZhuKoLiang said...

sifu ah, u got a lot of fans liao... famous liao ah? haha


11:56 AM  

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A self-directed investor, looking to invest for retirement needs and bypass all those expensive financial planners/insurance agents. Investing is fun, profitable or most important of all, knowledge gained is useful for the rest of your life!

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