The Difference Between Investing and Trading



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Summary:
This is referred to as the "buy and hold" strategy.

Real estate would be another example of investing, unless the property is purchased for quick flipping.

Jewelry, art, stamps, and collectibles are still other examples of investing where they are kept for a long time in the hope their value appreciates.

Trading

Trading is also investing but the time frame for a return on that investment is a much shorter period, usually a matter of a few days or weeks.

The most obvious example would be day trading where a trader is in and out of a market the same day.

Still other trading takes place over a period from a few days to a few weeks.

Most trading takes place with individual stocks and commodities, with commodity markets being the most predominant vehicle.


Article:

Investing and Trading are not the same thing. The returns you seek, the length of time it takes to volume-produce those returns, the product of risk one is prepared to take, and the commissioning one can make to monitor the investments dictate the strategy of whether to invest or trade.

Investing

Investing is holding an property for a longer term, expecting it to increase in value. The most mundane example is investing in equity mutual funds through a retirement plan. Many of these funds are held for years and are expected to show a substantial appreciation over the long term.

You can also invest in individual stocks and hold them for 6 to 18 months or longer, sometimes much longer. This is referred to as the "buy and hold" strategy.

Real estate would be otherwise example of investing, unless the property is purchased for quick flipping.

Jewelry, art, stamps, and collectibles are still other examples of investing where they are kept for a long time in the hope their value appreciates.

Trading

Trading is also investing but the time frame for a return on that investment is a much shorter period, usually a matter of a few days or weeks.

The most obvious example would be day trading where a trader is in and out of a market the same day.

Still other trading takes place over a period from a few days to a few weeks.

Most trading takes place with individual stocks and commodities, with article markets since the most predominant vehicle.



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Here’s some good stock analysis for you.

Whopper Investments and Oddball Stocks spar over net-net ADDvantage (AEY). Whopper Investments owns the stock. Oddball Stocks explains why it’s a pass.

And Andrew August at The Frog’s Kiss writes about Dreamworks (DWA). It’s a 14 page report. After reading his analysis, I emailed Andrew saying it was “the best analyst report I’ve ever read.”

I’ll say that here too.

This is the best analyst report I’ve ever read.

You’ll notice Andrew never puts an exact value on the stock. Which tells you something about good analysis.

A lot of value investing blogs and articles calculate intrinsic value for you. If you read Ben Graham and Warren Buffett – you’ll see they almost never do this.

Intrinsic value is a guess. Buying is the belief.

You don’t need to use a lot of math to prove exactly what something is worth. You just need to present a convincing case for buying it.

Talk to Geoff About Stock Analysis



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