Friday, May 30, 2008

Trade less and earn more?

In the realm of value investing advocated by Ben Graham and his disciple, currently world richest man, Warren Buffet, trading stocks frequently is totally unacceptable. I am incline to subscribe to their trading principles, after all, Buffet build his fortune buying stocks (business). However, principles are often easy to understand and hard to follow. If you just look at the transactions I have for DBS and one can see that I am a frequent trader of the stock. The highest price I bought is $22.50(2/10/07), lowest is $17.98(21/01/08).

Had I bought and held the DBS stock at $22.50, I will still be stuck with a $3000 loss*. Had I bought and held the stock at $17.98, I will be rewarded with a nice gain of $1500*.

I believe in investing for the long term, however during periods of high volatility, it seems more profitable to “hit and run” and pocket capital gains rather than rely in on dividends and “invest for the long term”.

Currently, I believe the markets have relatively stabilised and it is a good time to invest for the long term.
* DBS last traded @ 19.50 on 30/05/08

No comments: