Sometimes, having an active trading strategy is better than buying to hold. The underlying reasoning is quite straightforward: you have no assurance that the stock or the market will actually give you reasonable returns over the long term.

For that reason the best you can do is realise that equity partnerships tend to be quite profitable in the long-term if complemented by an investing strategy and, keeping this dependable mind-set throughout your investing career.

Consider the average investor dating back to 1999. Over the following 17 years equity investors earned a yearly average of 3.27 per cent. During this period, five-year rolling returns showed no returns above 10 per cent (commonly used as a benchmark return for long-term stock investments) except in the periods ending in 2005, 2006 and 2007.

Even for these outperforming years, someone might argue they represented periods of irrational exuberance.

The 10-year rolling returns had only the period ending in 2010 having a return above 10 per cent. Think about that. Buy-and-hold fell flat on its face. Obviously, and this almost goes without saying, no investor would want such low returns.

Now certainly it’s true that wealth generation is not the focus of everyone but I know for the majority it is.

Investors better appreciate that the true riskiness of an investment is not measured by beta (although I occasionally use it) but rather by an investment strategy that causes its owner a loss of purchasing power over his/her contemplated holding period.

In other words, investors are better off taking advantage of beta risk — price fluctuations — to buy-low and sell-high in order to deliver increasing purchasing power over their holding period as opposed to buying-and-holding.

The takeaway is simple. Since the basic game of “passive investing’’ is so unfavourable, I believe, it is a terrible mistake to try to continue down this path.

The risks of not meeting your investment targets are huge. You are best served choosing an active strategy that is suitable for your investment needs and apply it consistently.

Compounding will make up for the many valuation missteps while simultaneously providing reasonable results.