How To Really Ruin Your Financial Life and Portfolio

Chapter 1Trade Frequently

You’ve been in a casino. You’ve watched hockey. You’ve watched tennis. You know it’s all about “the action.” It’s about rapid, speedy moves, about drama, about sudden changes. That’s why it’s exciting.

Investing in a broad index fund and just letting it sit there, as John Bogle and Warren Buffett and Ben Stein and Phil DeMuth advise, is boring. It is slow. It is like watching paint dry. Why do it? What if the historical data shows you almost always do better by just buying the index and holding it rather than by frequent trading? What if those data are overwhelming and go back over many decades? What if they conclusively prove that jumping in and out of the market leads to returns so much lower than buying and holding—that you might as well just keep the money under your pillow as trade frequently? What if they show that this is true not only for 80 years in the United States but all over the world where stock corporations are allowed? So what?

Those data were about average returns from average investors. You don’t want average returns. You are not an average John Q. Investor. You are Superman or Superwoman. You want super returns and you are going to get them. And again, by definition, if you just buy and hold broad swaths of the market, you get the returns of the total market over long periods. Guess what: That’s not good enough for you. Not even close.

Instead, you go, guys and gals, go for frequent trading.

There are many ways to approach this. ...