I have a confession. I was not always a buy and hold investor. Who wants to be average? My job was to manage others money, surely I could beat the market.

I would spend countless hours researching investments, studying charts. It was a thrill when I won big, when I lost the results seemed to wash out. It has been 2,540 days since I last sold a stock. My returns and peace have greatly improved. Not suggesting to never sell a stock. I’m always ready to sell. But careful selection followed by patience tends to prevail.

***Note…if you are just starting your investing journey start with an Index ETF…build your foundation. A personal all-weather foundation ETF is the Vanguard Total Stock Market ETF (VTI). Once you build your holding to at least $10,000 and only then is it time to consider individual stocks.

Let’s look at why most individual investors fail to beat a broad index overtime. Feeling lucky?

Short-term investing has significant costs and drawbacks compared to adopting a long-term perspective:

Here are 10 reasons a short term mindset hurts your returns…

1. Tax inefficiency: Short-term capital gains are typically taxed at a higher rate than long-term gains, reducing after-tax profits.

2. Missing out on compounding: By frequently moving in and out of positions, investors may miss out on the powerful effects of compounding.

3. Emotional decision-making: Short-term investing is often driven by emotions like fear and greed rather than rational analysis, leading to poor choices. What is Roaring Kitty buying now?

4. Increased stress and anxiety: Constantly monitoring short-term price movements and trying to time the market can be mentally taxing.

5. Opportunity costs: Focusing on short-term moves may cause investors to miss larger, long-term trends and opportunities. Try trading Apple, it is hard to replicate.

6. Information overload: Short-term investors often struggle to separate meaningful information from market noise, leading to analysis paralysis.

7. Misalignment with company fundamentals: Short-term price movements often don't reflect a company's true value or long-term prospects.

8. Difficulty in valuing long-term rewards: Humans tend to undervalue future payoffs, leading to suboptimal long-term investment decisions.

9. Increased susceptibility to market timing errors: Trying to time short-term market moves is notoriously difficult and often counterproductive.

10. Missed dividends and distributions: Frequent trading may result in missing out on dividend payments and other distributions.

By contrast, long-term investing allows for reduced costs, tax efficiency, compound growth, and a more disciplined, less stressful approach aligned with fundamental value creation.

Interested in building a long-term portfolio? Listen to the Money Happy Hour Podcast, available wherever you get your podcasts. Each month I recap Radish, my Producers portfolio…aka “The Hardest Working Dog In Podcasting”. This is a real portfolio for Radish (my dog) that replicates my portfolio. She contributes to it weekly and uses ETF’s as the portfolio anchor and holds individual stocks with conviction.