Mas5k on Investing vs Trading22 Jan 2019 15:49
An interesting and insightful post from the SAM BB by Ma5k - which I respect.
"If I had to sum it up I guess I'd use the mantra "invest in fundamentals; trade on technicals"
Having said that I have personally largely rejected 'investing' which (absolutely no offence intended) I now consider, on purely financial grounds at least, folly. While I have the deepest respect for LTHs who have thoroughly researched a share and believe 'the story', it makes no logical sense to me to continue holding a share once a falling market has been identified. If a share is a 'keeper' then selling at (or as close to as possible) the top and buying back at the bottom will allow the accumulation of more shares providing material gain in a falling market without shorting. If a share falls 20% after selling you can then buy 25% more shares at the bottom with the proceeds and gain the full benefit of that increased holding through the subsequent rise. I used to invest when I started out but invariably lost money. It is only when I overcame my prejudice and actually listened to a thoroughly vile deramper (who took great pleasure in mocking LTHs) that I realised the underlying premise made perfect sense. To put it horribly bluntly "a LTH is a failed trader". Obviously that is an incredibly harsh viewpoint and not one that sits comfortably with me, but there is nevertheless a hidden thread of truth within that gross sentiment and one which has profoundly improved my success at consistent profitability.
And herein lies the crux of an important moral dilemma as I see it. Without loyal LTHs companies would fail and there would be nothing left to trade. If everybody selfishly traded every high and low then instability would swiftly be exaggerated to the point of destruction. It is the LTHs who provide the critical support on which traders rely. While successfully trading every high & low will inevitably bring significantly higher returns than holding through the lows I would argue that it is the holders who most deserve the reward. On a purely monetary basis investing is inevitably a loss-making indulgence (even if you see a profit over time you are nevertheless 'giving away' the fruits of playing the volatility to your advantage), yet I am of the firm belief that while necessary in a predominantly capitalistic society, money is of incredibly low value in the context of life as a whole. So while Iin the short-term I concentrate on cold rational profitability through trading unemotionally, I very much hope I will in time afford the luxury of indulging in investing. To me trading is about hard-headedly paying the bills and putting food on the table but investing is about lending your support to something in which you believe and as a result being instrumental to its success - imho far greater reward than financial.
In the meantime I trade & I trade predominantly on technicals because I have found this to be most reliable & lucrative."
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