Invest in a stock market and not trade
Do you trade or Invest ? I ask this question to everyone I come across in life, to understand their thoughts about the stock market. It is always been projected as making money in the stock market. My take, Invest in a stock market and not trade for creating wealth or maximizing wealth.
If you are a trader, you have lots of options to make quick money, there are derivatives like futures & options, commodity trading, margin trading, etc.
As an investor you are left with only one option of buying quality stocks at intrinsic value.
Why you need to Invest in a stock market ?
The theory of value investing was well discussed and put forth by the Investing Guru Benjamin Graham and David L Dodd in their book “Security Analysis”. They had published a paper in 1934, just 5 years after that Great depression had occurred.
In 1940 they had published a detailed second version as a book. Till it is considered as the Bible of Value investing. Warren Buffet, the living investor legend considers this as one of the best books for people getting into the stock market.
He is 89 now and has been an investor right from the age of 11. He has always bought companies at its intrinsic value. As of now in 2019, October he is holding cash worth 122 Billion Dollars. He is holding to buy a company at its intrinsic value. Warren started with a small amount at the age of 11 and he amazed more than 90% of his wealth after the age of 50 only. Did that just by believing the principles of Benjamin Graham. Fortunate enough to have him as a Mentor.
“Do you still need to have a reason for beginning to invest ?”
Why you shouldn’t be a trader?
In my personal interaction with many of them in the last few years, many jump into trading as a passive income generating method. They fall into the trap of making money and lose most of them quickly.
The different types of ways where people lost their money,
- Commodity trading
- Intra day
- Margin trading
- Futures
- Options
If you want to be a trader you need to learn a lot by analysing the stocks and be in front of the monitor watching the stocks. You need to start in the morning at 8 AM and spend time till afternoon at 4 PM. Again you should have a disciplined approach towards your trading.
All the above points were never shared by anyone who asks you to get into trading. There were many who had lost their hard-earned money by the way of trading.
| Trader | Investor |
| Daily Basis | Long term |
| Need to look into daily news | Analysing the fundamentals is more than enough |
| Global or Local news can affect the stock and your profitability | Fundamental stocks will rebound |
| Short term money making avenue | Long term wealth creation place |
| Possibility of making money is lesser | Possibility of wealth creation is huge |
Now it is you to decide if you want to be a trader or investor!