Most people say there are two types of people in the stock market—short-term traders and long-term investors. That doesn’t do a great job of covering everyone involved in the market, but thinking in those simple terms will help get my point across.
The main thing to note about those two types of people is the overriding mindset of each one, and how that could directly impact their respective bank accounts.
Here is why one of those mindsets is normally financial suicide…
Let’s say little Timmy has a chance to buy an ice cream stand out at the beach in June. He decides to purchase it, and he immediately begins making money while the sun is bearing down on the beach-goers and they crave the cold ice cream.
Then, after a few months, fall comes around and the weather cools off significantly. At that point, Timmy has two options…
Either he can hold on to the ice cream stand and suffer through the cold weather and bad business until late spring…
Or, he can dump the ice cream stand that is losing customers and search for a new stand to buy for the cold months—perhaps a hot chocolate stand.
In essence, that’s the difference between short-term traders and long-term investors as traditionally presented.
If Timmy were to hold on to the ice cream stand during the fall and winter, he would be like a long-term investor who has a buy and hold mentality. It’s like buying a stock in the bull market and holding on to it through a bear market.
I know that most people have been ‘brainwashed’ by investment bankers into thinking you must invest for the long term, but why hold on to a dying stock when you can switch gears and make money instead?
If Timmy were to sell the ice cream stand and buy a hot chocolate stand, he would be like the short-term trader who doesn’t want to hold on to a bad stock in the bear market.
Instead of buying and holding through a down market, the short-term trader changes his strategy and profits even in a bear market while Mr. Buy and Hold watches his bank account shrink up.
Obviously it’s not as simple as changing switching positions and trades often. It’s about knowing which stocks are healthy, understanding the state of the overall market, knowing how to profit from dying stocks, and more.
All of these skills are taught in our Code Breaker course, and they are now more valuable than ever considering the state the market is in now…
