She sold these today-LORILLARD TOBAC 6.875%20 DUE 05/01/20 544152AB7
She bought them about 2-3 years ago and made 15% on her investment plus earned the stated interest.
20% of this cash was put in a 10 year CD with a 3.2% coupon and with a death put provision which the former bond did not have.
The balance will be invested in a dividend paying stocks because in her tax bracket, dividends are federally tax free whereas the interest on the bond she sold was taxable.
She owns 16 stocks and has 2-3 stock transactions per year but 70% of the time she'll keep a small stake in her original investment as a trophy. She also sells covered call options which is why her account is only up about 13% this year and makes it the worst performing account of all the accounts I manage for friends and family this year.
"Should an investor buy and hold or trade one's way to wealth like Jim Cramer advocates?"
Yes. THat's the point of 30-50% cash. How much money did NOT get put into NKE in 1988 becuase it was tied up in a holding? Easy enough to find out-- it's the Wilshire 5K cap against the opening mkt cap of NKE.
As said here more than a few times,
Laws of a baltbear, "Trade into accumulation."