Re: Buy and Hold vs Market Timing
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money doens't come out of nowhere, you can't just *make* money appear in your bank without someone else losing it.
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In poker, this is true... Sum of all players winnings = Sum of all players losses + Poker Site Rake. No money created, just money shifting around.
In the stock market, when a stock's perceived value increases, money is indeed created out of nowhere.
Think of this very simplified example...
A new stock has an IPO, 3 people buy 1 share of the stock @ $10, a 4th person comes in and buys each of their shares (1 @ 11, 1 @ 12, 1 @ 13), the stock is now worth 13.
Person A - Bought at 10, Sold at 11 = +1 (cash)
Person B = Bought at 10, Sold at 12 = +2 (cash)
Person C = Bought at 10, Sold at 13 = +3 (cash)
Person D = Bought 1 @ 11, 1 @ 12, 1 @ 13, holding @ 13 = +3 (on paper)
Everyone made $$$.
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