Since it is all about building assets(i) that generate consistent income, does capital gain matter, does buy low sell high matter, then? You ask.
Yes it does. Capital gain provides you the financial capabality to invest in more assets(i) that generate income. With a capital gain, you have more cash to buy asset(i).
But, the process of wealth building does not stop at mere making a great capital gain. So after a killing in stock market, you are holding $50,000 more cash. Are you going to deplete this newly earned capital? If you keep your $50,000 in cash or place it in unit trusts, it is going to be depleted one day. Your cash or unit trusts will have a hard time chasing after inflation and provides for your old age without depleting the $50,000 itself.
But if you put this money into an asset(i), i.e. real estate (for rental), business (for profit), stock (for dividend), that generates higher return and raises with inflation. You are now creating a consistent stream of income without depleting your $50,000 value.
Unless you argue, you will put back the money in stock market going for a bigger kill. You say, "yes, the income is not consistent and I may even suffer losses but I don't depend on this income. I will survive even if I lose all $50,000. So I am willing to take risks for a greater gain. Time is at my side as I am young. My age reduces my risk as I have longer time to wait for investing gain." Sure, then. Go ahead. This is one of the strategy to build assets(i)!
But ultimately you will be old one day. Time will not always at your side. Erratic nature of capital gain will not suit your profile anymore. And you will probably depend on the income from your financial assets(i) instead of human assets. Then, put these huge capital gains that you have accumulated through out your youth into asset(i).
You should have realised by now, income generating assets(i) is the key instrument for retirement planning.
Part 1 : The conventional idea
Part 2 : The breakaway wisdom: income and assets
Part 3 : Building assets(i)
Part 4 : Assets(i) planning
Part 5 : Further exploration on the principle
1. The principle in a nutshell
2. Definition of assets(i)
3. Classes of assets(i)