Why I buy-and-sell, not buy-and-hold

Anyone who's talked to me about my trading style knows that I like short-term trades and do not believe in the buy-and-hold strategy.... It makes me feel more "in control", and perhaps it's an illusion, but I believe that with committing smaller amounts of capital to smaller moves (but more often) I protect myself from large drawdowns and therefore from the emotions that come from it. Also it keeps me sharp and up-to-date on all my trades, as opposed to the set it and forget it style of trading!

I've recently found myself more attracted to the high-frequency-trading style, because the trades are ultra short-term, and almost have absolutely nothing to do with the underlying stock or what the "analysts" think of it... (you can totally tell I'm still scarred by the BIDU analyst burn)!!

In every investing book, I read how over the long-term investing in indices is better and blah blah blah, but when I put the book down and look at the reality of what's happened in the past 10 years I see pain, I see ruin, ruin of people's spirits and their accounts. WHY? Because of emotions!

Sure, it all sounds great to make an average of 10% a year by holding an index of S&P500 stocks from 1950 to 2010, BUT life doesn't work like that. The texts that preach this style, don't usually talk about drawdown, they don't talk about the pain that the average investor will endure while the market finally stops dropping and enters a bull market again. By my own calculations, using publicly available data (Yahoo Finance), if you invested on Jan 1, 1950 and until Feb 1, 2011, you would have made an annual compound return of ......... 7.4%!!!!! Not to mention watching your portfolio go through some major drops, two of which would have been in the past decade! In the 1999 crash, you would witness a 47% drawdown (peak-to-valley), and a much more violent drawdown of 56% in the recent 2008 crash, which we still haven't recovered from!


Did everyone hold their portfolios through this downturn? Or did people sell at the worst time because emotions took over?

Ultimately it comes down to preference and trading style, for me short-term is the way to go!