Why ‘free’ trading short-termism is indistinguishable from gambling

He said: “The short-term gyrations of individual stocks, and in fact entire markets, almost never have anything to do with actual business fundamentals – sometimes they do, but more often not.

“Trying to predict these short-term moves — or worse, trying to base one’s investment strategy on predicting and timing such moves — has always been impossible, and in the modern landscape of high-frequency trading, massive algorithmic trading schemes, and now the social-media induced get-rich-quick flavours-of-the-minute being touted on Reddit and traded on RobinHood, we would argue that short-term strategies have become more hazardous than ever.”

With this type of volatility a constant threat, he added that it’s crucial to stay calm, centered and still. The firm has been warning clients for months that a correction was inevitable but Frigon stressed that if proper planning has been done, an investor should have ample cash on hand to handle whatever near-term needs he or she may have.  

“More so than ever, stock prices, in any short-term period of time, are impacted by almost anything but fundamental business activity,” he said. “Over time, those business fundamentals will ultimately drive values of companies.  

“However, those who react to the crazy volatility that can occur in these short bursts — as we are witnessing now — do so at their own peril.”

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