Yeah, that’s the standard admonishment to anyone who buys and/or sells stocks. You are supposed to buy under-valued stocks, then hold them until such time as they increase in value, and only sell when the stock is worth more than you paid for it. Most people who trade more than once in a while, and who are normal humans, often break that rule, especially when the stock markets are plunging due to some news or other. A lot of investors have very little tolerance for risk, selling their holdings into a down market, and losing money; then buying stocks when the markets are near their highs.
I do my best not to be that kind of investor. I only started investing in individual stocks in the late 1990s when I received an inheritance. I had an account at an online brokerage which had low trading fees, and once I bought my stocks I held onto them, to avoid incurring fees. I have to say, I did pretty well, and reinvested what dividends I got, so the value of my portfolio grew. That brokerage was sold multiple times, and my little individual stock account was pretty stable.
In the year 2000, I had a summer job with a temp agency, which had a 401(k) for which I could have money withheld from my pay. At the end of that job, I had the grand amount of $745 in the account, and I rolled it over into a Roth IRA at my online brokerage. At that time, I could contribute a couple of thousand dollars a year to the Roth, gradually adding money until my household income (combined with my new husband’s in 2003) was too high to contribute more. I managed to choose some very good stocks, and I had very few losses. Looking at that account today, I managed to parlay that $745 into over $60,000.00. I call it my “play money” Roth IRA, and in the last couple of years I have been trading more, since the brokerage eliminated any commissions for trading most stocks.
One of the stocks I bought over 10 years ago, Costco, has increased in share price from $83.00 to $466.00, an over 400% increase! I always reinvest dividends, and my relatively few shares (20 now, after selling 2 a few weeks ago) are worth over $9,000.00! Whew! I love that Costco stock, like I love Costco, so it’s actually wrenching to decide to sell some. But I just put in my “sell” order for five shares, which will net me over $2,300.00 to re-deploy. Talk about buying low and selling high!
And next week when the sale clears, with the money from 5 shares of one stock, I’ll be buying 10 shares of four other stocks that I already own! The stocks I will be buying are REIT stocks, which pay nice dividends. I try not to panic if the market goes down, and last year with the pandemic I did not sell anything, just quit looking at my balances every day. Since I’ve been retired, I have done well, I think, and now that I have some income from my temp job, more money will be going into my play-money Roth.
Investing is fun! Try it, you’ll like it. But don’t go off the deep end, just invest money in stocks of companies you like, and you will be rewarded.