"What's the difference between a trader and an investor?"
- Thread starter -ooO-(GoldTrade
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Speculating vs. Investing
"Clearly, if we buy real estate in the hope that five years from now it will net us a large profit, we are investing. But if twenty-six minutes after our purchase, oil is discovered on the premises and we are instantly offered a large profit for the real estate, have we now changed the nature of our original purchase if we accept the offer? I think not. Whether we held onto our purchase for five years or for a matter of minutes, the purpose was the same. If it was an investment in one case, it is an investment in either case?
Leo Melamed
"There are many who would argue that futures cannot be considered an investment. Certainly they are correct in terms of the classical definition of investment. Encyclopedia Britannica tells us that investment is the
"Another major characteristic of futures is the leverage available to the speculator."
"Clearly, if we buy real estate in the hope that five years from now it will net us a large profit, we are investing. But if twenty-six minutes after our purchase, oil is discovered on the premises and we are instantly offered a large profit for the real estate, have we now changed the nature of our original purchase if we accept the offer? I think not. Whether we held onto our purchase for five years or for a matter of minutes, the purpose was the same. If it was an investment in one case, it is an investment in either case?
Leo Melamed
The Intelligent Investor: Benjamin Graham
"Imagine that in some private business you own a small share that cost you $1,000. One of your partners, named Mr Market, is very obliging indeed. Every day he tells you what he thinks your interest is worth and furthermore offers to either buy you out or to sell you an additional interest on that basis. Sometimes his idea of value appears plausible and justified by business developments and prospects as you know them. Often, on the other hand, Mr Market lets his enthusiasm or his fears run away with him, and the value he proposes seems to you a little short of silly.
If you are a prudent investor or a sensible businessman, will you let Mr Market's daily communication determine your view of the value of a $1,000 interest in the enterprise? Only in case you agree with him, or in case you want to trade with him. You may be happy to sell out to him when he quotes you a ridiculously high price, and equally happy to buy from him when his price is low. But the rest of the time you will be wiser to form your own ideas of the value of your holdings, based on full reports from the company about its operations and financial position.
The true investor is in that very position when he owns a listed common stock. He can take advantage of the daily market price or leave it alone, as dictated by his own judgement and inclination. He must take cognizance of important price movements, for otherwise his judgement will have nothing to work on. Conceivably they may give him a warning signal which he will do well to heed - this in plain English means that he is to sell his shares because the price has gone down, foreboding worse things to come. In our view, such signals are misleading at least as often as they are helpful. Basically, price fluctuations have only one significant meaning for the true investor. They provide him with an opportunity to buy wisely when prices fall sharply and to sell wisely when they advance a great deal. At other times he will do better if he forgets about the stock market and pays attention to his dividend returns and to the operating results of his companies.
<b><font color=red>The most realistic distinction between the investor and the speculator is found in their attitude toward stock-market movements. The speculator's primary interest lies in anticipating and profiting from market fluctuations. The investor's primary interest lies in acquiring and holding suitable securities at suitable prices. Market movements are important to him in a practical sense, because they alternately create low price levels at which he would be wise to buy and high price levels at which he certainly should refrain from buying and probably would be wise to sell." </b></font>
"Imagine that in some private business you own a small share that cost you $1,000. One of your partners, named Mr Market, is very obliging indeed. Every day he tells you what he thinks your interest is worth and furthermore offers to either buy you out or to sell you an additional interest on that basis. Sometimes his idea of value appears plausible and justified by business developments and prospects as you know them. Often, on the other hand, Mr Market lets his enthusiasm or his fears run away with him, and the value he proposes seems to you a little short of silly.
If you are a prudent investor or a sensible businessman, will you let Mr Market's daily communication determine your view of the value of a $1,000 interest in the enterprise? Only in case you agree with him, or in case you want to trade with him. You may be happy to sell out to him when he quotes you a ridiculously high price, and equally happy to buy from him when his price is low. But the rest of the time you will be wiser to form your own ideas of the value of your holdings, based on full reports from the company about its operations and financial position.
The true investor is in that very position when he owns a listed common stock. He can take advantage of the daily market price or leave it alone, as dictated by his own judgement and inclination. He must take cognizance of important price movements, for otherwise his judgement will have nothing to work on. Conceivably they may give him a warning signal which he will do well to heed - this in plain English means that he is to sell his shares because the price has gone down, foreboding worse things to come. In our view, such signals are misleading at least as often as they are helpful. Basically, price fluctuations have only one significant meaning for the true investor. They provide him with an opportunity to buy wisely when prices fall sharply and to sell wisely when they advance a great deal. At other times he will do better if he forgets about the stock market and pays attention to his dividend returns and to the operating results of his companies.
<b><font color=red>The most realistic distinction between the investor and the speculator is found in their attitude toward stock-market movements. The speculator's primary interest lies in anticipating and profiting from market fluctuations. The investor's primary interest lies in acquiring and holding suitable securities at suitable prices. Market movements are important to him in a practical sense, because they alternately create low price levels at which he would be wise to buy and high price levels at which he certainly should refrain from buying and probably would be wise to sell." </b></font>
The term "investment" means an asset that, after thorough analysis, promises safety of principal and an adequate return. An investor is a person who uses analysis and reason and applies it to making investment decisions on assets that are held long-term. Analysis is the primary tool of investors.
The speculator mainly uses price behavior, volume of trading , public opinion, crowd psychology and market reaction to news to anticipate price moment. Observation is the primary tool of speculators.
The speculator mainly uses price behavior, volume of trading , public opinion, crowd psychology and market reaction to news to anticipate price moment. Observation is the primary tool of speculators.
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Answer; not much as long as both have a selling plan.
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''Discretion shall preserve you ''- Solomon,trader king
Traders get paid for time invested.
Investors get paid for capital invested.
Simple as that.
Best,
David
Investors get paid for capital invested.
Simple as that.
Best,
David