Would it be a good idea to invest long term in a stock but buy in the morning and sell at the close every day? This can reduce the risk of an economic crisis affecting my portfolio. I would hold it overnight if there was an earnings report etc.

  • 4
    This is self-contradictory. On one hand, you're talking about long-term investment. On the other hand, you're considering buying and selling stock every day. – void_ptr Aug 13 '18 at 20:01
  • 2
    Oh ya, the old buy and sell every single day variety of long term... – quid Aug 13 '18 at 23:08
  • This is a great idea for the days when the stock goes up after you buy it. For the rest of the trading days, not so much. Now if you could only figure out which days are going to be up days. Then you would have something... :-) – Bob Baerker Aug 14 '18 at 11:52

An economic crisis can occur during the day too!

So this doesn't sound like a great idea for several reasons, the first one of which is transaction fees. Secondly, tax obligations: any profit at the end of the day is taxable, and so over time you can potentially accumulate a lot of taxes on stock that didn't appreciate in value a lot.

  • But most happen overnight right? For example, Trump tariffs, the recent turkey crisis. And I can sell as quick as possible in the day but can't do anything when the market is closed – MammothActuary Aug 13 '18 at 19:54
  • Yeah, in theory that's not impossible, so as long as you're okay with the downsides. – NS0 Aug 13 '18 at 19:58
  • @chrislam5459 the important parts are "transaction fees" and short term "tax obligations". – RonJohn Aug 13 '18 at 20:01
  • Understood. For me personally, my account is tax free anyway and the commissions are negligible. I am just wondering if there are any other disadvantages to this strategy? Thanks – MammothActuary Aug 13 '18 at 20:04
  • @chrislam5459 Because you will lose money on a large number of days, and "negligible" commissions aren't, if you have to pay them twice a day (once to buy; once to sell). – TripeHound Aug 14 '18 at 7:54

Under your plan not only will you have transactions costs every day, and capital gains issues every day, but you will miss both the good and the bad of the changes that take place when the market is closed.

Sometimes those events that you want to neutralize because they take place at night or on weekends are the events that you want to capture. If the price jumps overnight then you will end up buying fewer shares the next morning. Those are gains that you can't get back.

  • This. Transaction costs will eat up any profit you make at all. – ApplePie Aug 13 '18 at 21:38

Besides the already mentioned excellent points about transaction fees and tax obligations, you're missing the whole point of long term investing: it ignores short term crises like Trump tariffs and the Turkey crisis.

Buying in the morning and selling in the afternoon is... day trading. And ignores after hours trading and world markets.

  • Isn't that good though? – MammothActuary Aug 13 '18 at 20:10
  • They both accomplish the same function – MammothActuary Aug 13 '18 at 20:10
  • @chrislam5459 you're not smarter than everyone else. We've all had this idea at one point or another. ALL OF US. But it doesn't work for the reasons mentioned by user6731765. – RonJohn Aug 13 '18 at 20:22

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