I've done all three. I find that I get bored with a bike after a few years and usually start looking at the next shiny toy (there are exceptions, I doubt I'd ever get bored with my Merlin, Koga or Sachs). I'll often then sell that item and use it to fund a new shiny toy. I do occassionally flip, but I'm very careful and picky in that regard. I flipped a total of about 30 bikes last year for an average of about $250 in profit per bike. I've found that being picky and staying at the high end of the scale leads to less work, quicker sales, less chance of getting stuck with something and more enjoyment. That money also went a longggg way towards funding my personal collection.

I consider bike profits hobby funds, but that might change now that I'm married...and I'm sure it will change with kids in the mix.