Investing Is a Marathon. Trading Is a Sprint.

When it comes to money… most people think very short-term these days. That explains the popularity of same-day expiration options, sports betting, and trading meme stocks like GameStop GME.

All those things provide fast resolutions. You either win or lose, then simply move on to the next adrenaline rush.

In the late 1990s these type investors were actively playing internet and technology stocks for their high volatility and deep liquidity.

The dream job was being a day-trader who made enough in the first market hour or two each day to then go golfing, surfing or whatever it was that was fun for them.

Value investing was then, and is again today, being called a dinosaur which was fast becoming extinct.

We have all read books about legendary investors like Benjamin Graham, John Templeton, Peter Lynch, and Warren Buffett. How many books can you think of about legendary traders? The only one that comes to my mind is Reminiscences of a Stock Operator.

That book was based on the life of Jesse Livermore, born July 26, 1877. He was a major trading force during the early 1900s through the time of his death, by suicide, on November 28, 1940.

His manic-depressive career saw him make and lose fortunes multiple times via short-term trading and short sales. He died by his own hand while facing bankruptcy once again.

Other briefly famous short-term traders were anointed heroes before flaming out just like Mr. Livermore. Recent examples of these type individuals might include Cathie Wood and Roaring Kitty.

Truly contrarian investors these days tend to like out-of-favor, cheaply valued stocks. They also expect to hold their shares for months or years rather than hours, days, or weeks. Regular readers of my columns know I fall into that category.

Buying “value” names and waiting for them to come back into favor can often be a grueling experience. Practiced correctly, though, it typically pays off handsomely.

An old saying that I have always lived by is…”You do not make money when you sell stocks that went up. You make it when you acquired those shares at rock bottom prices.”

2023 proved to be one of my best total return years ever in terms of absolute profits. That would not have been the case on Oct. 28, 2023 after a brutal three-month sell-off from late July.

Taking huge dollar positions in shares sporting excellent fundamentals but insanely low valuations during that period paid off handsomely. My personal accounts showed seven-figure upturns in both November and December of 2023.

Those two months turned a so-so year into a great one.

After taking profits on many of my largest positions this year, 2024’s realized gains have been piling up on shares I bought and held over the previous couple of years.

As of June 11, 2024 my total realized year-to-date gains totaled a satisfying $1,284,283.

Better still, $729,556 of that sum was earned within my traditional and Roth IRAs. The gains in the old-school IRA are deferred until withdrawn. The $309,121 of realized total gains in my Roth IRA are tax-free forever.

All future gains in the Roth will be treated that way as well. So will all dividend income and covered options premiums earned inside that tax-free wrapper.

Holding positions for over one year sounds boring to many people. In my taxable account, though, 63.4% of my YTD realized gains now qualify for favorable capital gains tax treatment.

American Woodmark AMWD is still #4 on my top-five list even after locking in handsome gains on a good chunk of shares. American Woodmark set a new profit record (adjusted EPS = $8.53) in FY 2024 (ended April 30, 2024). At present it trades for a P/E of about 9.6x.

Caleres CAL was my #1 largest holding prior to AMWD taking over that spot in 2022, and remains a large position. It now sells for only 7.4x management’s mid-point EPS guidance for FY 2024. I bought the bulk of my shares in CAL during the Covid panic at south of $6.

Generac GNRC is sitting on what should be many terrific year-over-year quarterly earnings comparisons. Its all-time share peak was north of $524 during 2021 on EPS of $8.30. It fetched 63.1-times earnings back then and should catch momentum traders’ fancy again as the excellent comps start rolling in.

Cracker Barrel CBRL changed hands at lows ranging from $81.90 to $118.00 during each of the calendar years stretching from 2014 through 2022. Its peaks ranged from $118.60 to $185.00 during each year from 2014 through 2023.

Long-term thinkers buying at today’s quote should be well rewarded.

Other recent large recent buys for me include Designer Brands DBI and Baxter International BAX.

DBI dropped from $11.57 as recently as Mar. 14, 2024, to as low as $6.89 on Jun. 11, 2024. It yielded 2.74% at Wednesday’s close of $7.29.

Baxter International fetched $95.20 during 2020 on EPS of $3.09. It was offered at less than $32.69 on Jun. 10, 2024 on expected current year EPS of $2.92.

At this week’s nadir BAX yielded 3.54%.

Like everybody else, I am only human. It hurts being too early to the game when stocks sink after you first buy them. True believers, though, barring deteriorating fundamentals, find the resolve to average down.

My version of “living the dream” has been supporting a genuinely nice lifestyle almost exclusively via portfolio returns. I am now in my 46th year of investing. I have predominantly lived off my total returns for the past twenty-four and a half years.

That is something that cannot be faked. Plus, my philosophy has stood the test of time through multiple bear markets including the Crash of 1987, the tech/internet bubble bursting in 2000, the financial crisis of 2008-09, and the Covid-panic of 2020.

Stop focusing on ultra-short-term transactions. Start investing for the rest of your life. You will avoid the stress of fast-paced trading while pocketing better returns and paying lower taxes.

Become a marathon runner.

If you have not yet started a Roth IRA, the best wealth creation product in America’s history, it is not too late to do so.

More Paul Price:

At the time of publication, Price was long shares and short options on all stocks mentioned except for no positions in GameStop.