A lot of investing books will tell you that "buy-and-hold" is far superior to actively trading stocks.  Buy-and-hold investors purchase their stocks and hold it through the ups and downs for a longer-term profit; whereas active traders buy and sell stock regularly, attempting to capitalize on the volatility of the stock market.  Research has shown, however, that most buy-and-hold investors do better over the long-term because of the additional transaction costs of constant trading, not to mention how hard it is to time market volatility.

Yet despite what history says, there are always exceptions.  The Globe and Mail recently had an article featuring Noah Blackstein, manager of the Dynamic Power American Growth Fund, and how his portfolio turnover rate has been greater than 740% over the past four years.  In 2003 alone his turnover was 1,265%!!  Still, regardless of all the trading, he has beaten the S&P 500 total return index by over 9%.

The article also highlighted Peter Hodson, portfolio manager of the Sprott Growth Fund.  His turnover has been over 335% over the past two years and he too has beaten the index by a large 12.8% margin.

Sure those are only a couple of exceptions, you may be thinking.  But actually there are a lot more.  While reading that Globe article I remembered last year reading about a couple of other stellar performers with high turnover.  Rohit Sehgal, manager of the Power Canadian Growth Fund (of which I am a unit holder), had turnover of 180% in 2003 and 244% in 2002.  And super-star manager Normand Lamarche, who manages the Front Street Special Opportunities Fund, says his average turnover is 100% to 200% a year.  In case you were wondering about my definition of "stellar performers", the Power Canadian Growth Fund has a 5-year 27.63% rate of the return, and the Front Street Special Opportunities Fund has a 5-year 37.09% rate of return.  No too bad for actively trading.

So there you have it.  Even though almost every book I have read on investing tells you to buy-and-hold, obviously that is not the only way.  The more I learn, the more I realize that there is no set formula for success in the stock market.  All that really matters is finding a winning strategy -- and sticking with it.