If you're using the fat-pitch approach, you won't need to trade very often because you'll hold only wide-moat companies. By definition, a wide-moat company has long-term advantages and creates shareholder value year-in and year-out. Because a wide-moat firm creates value each year, its fair value tends to increase over time. These are the only types of stocks in which a buy-and-hold strategy works well, because the odds are in your favor that the actual underlying value will continue increasing over time. As we mentioned earlier, when you buy a company with no moat, you are making a bet that it will bounce up just long enough for you to sell it.

Think of it this way: Investing is nothing more than a game of probabilities. No matter how diligent you are, your fair value estimate for a stock will never be exactly right. It's really just an estimate of what a stock is worth under the most likely scenario for future earnings growth and profitability. Thus, there's always less than a 100% probability that you'll be right about a stock pick. Given that the odds are below 100%, there's little point in trading from one stock to another frequently; your odds of being "right" on the new pick are probably only a little higher than the odds of being wrong on the current pick.

Add to this the costs of trading--including taxes, bid-ask spreads, and commissions--and the odds of generating higher returns by trading frequently are worse than simply buying great stocks at good prices and holding them for three years or more. 

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