Why do investors prefer trading strategies? The number one reason is that neither the investor or the financial advisor knows what would make a good long term buy and hold investment. Financial advisors have few or any investments that can outperform the S&P especially for long term.

Financial advisors tend to recommend stocks that have fallen and represent “good value”. The advisor has a price target of usually 20% higher. The odds of this being a low are near zero. A stop is often placed 20% below the purchase price. If a stop is not used and the stock goes lower the investor holds on for sometimes years with this purchase hurting performance.

For over 40 years the average investor has underperformed the S&P by 5% per year on their entire portfolio. Investors remember their few good trades that made little and forget the ones that lost a lot. The investors focus should be on the total portfolio performance not one trade.

If you want to make money long term you need a long term buy and hold strategy. The easiest strategies use cap weighted ETFs that select the stocks for you.