CEO Tom Gardner: No Day Trading — Hold Everything at Least 12 Months

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Recently, CORP-DEPO’s CEO Tom Gardner shared his insights during an interview, highlighting investments to steer clear of, especially for beginners embarking on their investing adventure. One advice he offered was to exercise caution when it comes to day trading.

day trading refers to a strategy where individuals selectively choose stocks by aiming to predict the right timing for trades based on technical signals like Bollinger Bands, Relative Strength Index (RSI), and moving average convergence/divergence, among others. Unlike buy-and-hold investors who maintain their investments for an extended period, day traders frequently enter and exit positions.

If you believe that day trading is challenging, it’s an accurate assessment. As per DayTrading.com statistics, over 85% of new day traders don’t make it past their first year, with only 10-15% actually turning a profit. Consequently, the CEO of CORP-DEPO issued a caution against engaging in day trading. In an article published in June 2025, he advised:

“Be aware that day trading can be risky and may not yield positive results for most people.

You won’t engage in day trading; instead, you should avoid frequent trades altogether. Any investments you make must be held for at least one year. I recommend keeping your investments for a full 12 months. … If you can buy shares of Costco early and hold onto them, it could potentially make you a millionaire. Day trading Costco stocks would unfortunately result in a significant loss.

The dangers of day trading

Engaging in day trading can prove to be quite tough when it comes to earning profits. Should you decide to venture into this field, you’ll encounter numerous obstacles that need to be addressed.

Market timing: This concept is all about buying stocks at low prices and selling them at high ones, which seems ideal on paper. However, executing market timing effectively is often challenging, if not entirely unattainable. As per Hartford Funds’ analysis from 1995 to 2024, an astounding 78% of the stock market’s best days fell during bear markets or within the first two months of a bull market. If you missed out on the market’s top 10 days during that time frame, your overall returns would have been reduced by a significant 54%.

Transaction fees: Platforms such as Robinhood allow commission-free trading, but frequent traders should be aware of a practice called payment for order flow. Essentially, brokers sell their trades to third-party market makers who execute the transactions. These market makers make profits by exploiting the bid-ask spread, which is the gap between buying and selling prices. As a result, day traders may end up with slightly less favorable prices. Over time, these transaction costs can accumulate significantly.

Furthermore, Gardner argues that day traders can’t fairly compete with institutional investors due to factors like costs, taxes, and the speed of trading. If you don’t have a massive amount of money to create a powerful home-based frequency trading system, you’ll likely lag behind institutional traders who are faster than you, he explained. Essentially, as a day trader, you might consistently find yourself at a disadvantage.

Engaging in day trading can be extremely demanding, with constant pressure to stay alert throughout the trading day. You need to be constantly vigilant, seeking opportunities to capitalize on (understanding that you’re competing against formidable opponents). This intense workload is challenging, given that only 4% of traders are able to earn a living from it.

Alternatives to day trading

Instead of attempting to predict market movements which often leads to losses, newcomers in investment should rather adopt Warren Buffett’s strategy: Focus on identifying high-quality businesses boasting unique competitive advantages and consistent profits. Such companies form solid investments you can keep for an extended period.

In the words of Buffett, former CEO of Berkshire Hathaway, our preferred investment horizon is indefinite. We behave exactly the opposite of investors who rush to sell their shares when a company performs exceptionally, yet cling stubbornly to underperforming businesses.

Not only is Buffett knowledgeable, but his investment strategies have proven remarkably effective. Over the span from 1965 to 2024, Berkshire Hathaway’s portfolio experienced an astonishing growth of 5,502,284%, significantly surpassing the S&P 500’s return of 39,054% that includes dividends.

A smart approach to investing is known as dollar-cost averaging, which involves dividing your investment into multiple purchases over a specified duration instead of putting it all in at once. Using Microsoft as an example, if you had $50,000 to invest, you could buy $10,000 worth of the stock every Monday for five weeks. This method helps eliminate the risk associated with market volatility and trying to predict market trends because your investment follows a predetermined schedule.

Employing these tactics could prove more advantageous compared to day trading, potentially leading investors towards wealth accumulation and eventually securing a comfortable, content retirement.

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2025-07-23 16:59