Posted on 07/03/2007 1:51:15 PM PDT by VA Voter
The act of investing is quite different from trading. Purchasing shares of Microsoft Corporation in 1992, with the intention of holding them for the long haul, was most definitely an investment. The return was about 1,000% over the 10-year period. The trader, on the other hand, may have bought and sold Microsoft stock many times during that same period, taking advantage of the natural ebb and flow of the market.
While the investor seeks to know his or her investment-meaning the company in which they are investing-in great depth, the trader uses other information in seeking quick short-term profits, and thereby earning potentially greater long-term gains. This is puzzling to some, since the traditional concept of stock ownership is that it's shared ownership of the prospects of a company. Buying and selling stock not for the business prospects of the company, but rather for its short-term price fluctuations, seems odd at best and wrong-headed at worst.
But what if you traded commodities instead? The wheat trader cares not for the nutritive value of the wheat, but rather for its short-term price fluctuations. This is usually weather related. If there's due to be a bumper crop, the supply will be high and prices will fall. For shortages, the reverse is true. Traders bet on such prospects, and nothing more, in commodities as well as in a variety of industries. Are stocks commodities like wheat or oil, milk or gold? This question is often the subject of heated debate. The fact is that stocks are traded like commodities, and their short-term market price behavior is no different than that of wheat or oil, milk or gold. It's governed strictly by supply and demand.
Now take it one step further.
One of the revolutionary changes in U.S. financial markets in recent decades was the growth of short-term trading in the BOND market -- which had previously been considered something of a quiet backwater among financial markets.
The notion that people would trade bonds just as they traded stocks, commodities, etc. was what made Michael Milken a very rich man.
If that's something that's just off the top of your head that you've heard everyone saying, then you're in really good company. Lot's of people say that. They're not necessarily wrong, they're just pretty good at convincing others that they know more than they do.
I work and study math and computer science, but my dad has been an investor and trader for longer than I have been around.
From simple observation, I can say that you should never limit yourself to just "trading" or just "investment." I'm sure that those folks who "invested" in tech start-ups in the late '90s (that later were delisted and went bankrupt) are really happy now.
You look for opportunities in the short and long term...and, if you are unsure of how to manage your portfolio, go talk to an actual expert.
” if you are unsure of how to manage your portfolio, go talk to an actual expert.”
...and let him charge you for advice that, as proven by dartboard portfolios that generally outperform actual experts, is a good as chance and not much more.
“See all those yachts down there?”
“Yeah.”
“Well, they belong to the stock brokers.”
“Where are the buyers’ boats?”
It’s another “secret to the market” scam. You might try trading and then be left holding the bag, when the stock you like moves quickly. Then you expect it to come back down a bit but it moves up further.
On the other side there are those people who blindly hold onto stocks despite any major movements in an industry.
I think people should buy with the intention of holding the stock for at least a year. Then the investor should reevaluate his positions every year. Don’t forget to diversify.
“it’s time in the market not timing the market.”
What drivel.
And some are. But not the successul ones, always excepting Marty Scwartz.
“The Margin Call is the only unqualified advice you will ever get from a broker”
Exactly, though it's not really a news article, it's really just a sales pitch at some guru's website and the reason for the bias is to convince the credulous to pay big bux for the author's wisdom.
People make a living doing that sort of thing because most people don't understand the stock market. I mean, how many freepers would be willing to cough up their life savings if someone said "I know how to beat the supermarket".
There is one rule: buy low, sell high.
If it doesn’t go up, don’t buy.
It looks to me as though firms are pushing the ordinary Joe and Jane toward commodities these days. Lots of ads. Lots of articles. That has “danger” written all over it, in my opinion.
Intelligent comment.
Unintelligent comment.
You’re better off reading a few good books and making your own decision on a portfolio. Brokers aren’t worth the money.
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