This goes against everything our great overlord Buffett taught us with his buy and hold strategy.
Somebody was giving me investment advice and they said that I should regularly sell my profits, then instantly buy back in to the same stock to “lock in the gains”.
And I should ideally do this forever over the lifetime of my investment instead of buying and holding. He said this is the only way to lock in profits and compound your investment.
This is how he said it should be done:
So let’s just say I buy €100 worth of Amazon.
Next week it rises to €110.
Rather than keeping the gains, I should sell the €10 worth of gains, then buy back €10 worth of Amazon stock. Now I have €110 worth of Amazon stock.
Does this make sense to anybody here? Does anybody here do this style of investment?
Apparently my style of investing (buy, hold, regular topping up) is the wrong way to do it.