StealthP3D
Well-Known Member
I have two accounts where I simply HODL the majority of my TSLA shares, but I also have a little brokerage account where I try my hand at day & swing trading as a personal challenge to see how high I can grow the account. These weekly swings in TSLA have been great fun, I buy a few dozen shares when it gets down below $815 and I sell them whenever it gets up to $850. It's been profitable!
Is it tax-deferred?
Either way I would suggest that, over long time periods you would be better off to just hold the same amount you have set aside for swing trading in long-term TSLA shares. The reason for this is invariably you will miss out on some big surprise moves and your capital will not be deployed or will only be partially deployed. While swing trading, it often will seem like you are making "easy money" right up until you are not. Compounding long-term gains on a company like TSLA can generally outperform swing traders. There is always an exception but it's unlikely you are that exception. Unless you happen to also be a better than average driver.
The exceptions are almost non-existent if the gains are not tax deferred. That's why the proven and tested way to build real wealth is to buy and hold. Yes, I'm repeating myself, but some things deserve repeating.
I will also point out a different common characteristic of losing behavior, even for people who think of themselves as "buy and hold" investors:
After a prolonged period of pain (defined as a long period of flat to negative appreciation), followed by new all-time highs, many people can't help themselves from pushing the sell button, at least on a portion of their position, even though they don't need the money. It just "feels" like the thing to do to 'heal' after waiting up to two or even three years for the stock to appreciate again. To take profits. Because they don't want to go through those years of pain again. The fallacy here is that the seemingly high and joyous price is often just as likely to continue to appreciate, after some minor pull-backs, as it ever was.
Having said that, there are times when, in hindsight, big money can be made by selling at the top and investing in other things for a few years and buying back in later, when the stock is ready to appreciate again. The obvious fallacy here is thinking an individual can identify these points with a degree of accuracy and consistency to make it worthwhile. Do you know anyone who sold TSLA at the highs of 2014 after 10X'ing their investment, and used all that money to buy back in 5 years later near the lows of 2019 (after profitably re-deploying the capital in the interim)? Neither do I. They are out there but they are few and far between. However, the people who simply held all their shares have done phenomenal and they didn't have to figure out a profitable place to deploy that capital for 5 years in the middle. Sure, it could have been even more profitable if they had, but who could time that and do it with such confidence that they would re-deploy the full amount at the right time near the lows of 2019?
Every swing trader feels like a genius when most of their trades are going their way, a string of "bad luck" or bad decisions can turn the tables very quickly. Very few swing-traders become multi-millionaires over, say, a 30 year period, relative to those who buy and hold growth companies. And yet, people still want to try. They justify it by only using a portion of their investable capital which partially mitigates, but does not fix the problem.
Honestly, I don't care whether people swing trade or not, I've been known to have fun in a casino where the odds are even worse, but I do think people should go into it with their eyes wide open, knowing that it is just a sport that will likely cost them some appreciation over time. And the younger you are, the more difference it will make over time. Compounding over time, even at slightly higher average rates of return, can make a huge difference down the road. The obvious solution is to increase, not decrease, the chances your average rate of return will be higher.
