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Are You A Trader Or Investor ?

TedTed
in Fund Discussions
FYI: At the risk of overstating the obvious, there are important differences between traders and investors. Their timelines differ, as do their goals, preferred assets and methods. Yet some of what I have been hearing from members of each group suggests they themselves can sometimes become confused about these dissimilarities. Blame the recent market volatility for this.
Regards,
Ted
http://www.ritholtz.com/blog/2015/09/trader-or-investor/print/

Comments

  • hawleyl
    Many decades ago I met a stock market specialist who was a Vietnam veteran. He said in Vietnam there was the saying “There’s the quick and the dead.”; then he said “In the stock market there’s the quick and the poor.”. This was a time when people did the trading and there were no HFT or other computer automated schemes. By quick he meant the real-time ticker; by slow he meant the 15 minute delayed ticker - a far cry from the HFT of today.

    In general time can be categorized as past, present, or future. The past is all events that have occurred; the future is all possible events that may occur; and the present is the time between the past and the future. For example you plan to have a celebration of the new Government Fiscal Year on Saturday, October 3rd (with hopefully no Government shutdown). Your plan is to have a barbecue steak dinner. In order to determine the number of steaks to order, you send out invitations asking potential attendees to RSVP by September 30. With regard to the number of steaks to order, the time between September 30 and the time you send out the invitations is the present time.

    Given the above, as an investor, I conclude that any comments I hear on TV are history. The next day the comments are ancient history and are ignored in favor of the current comment d’jour.

    To be a successful trader you would need to be able to imply a future event from a past event and act fast enough before the implied future event becomes a past event. Given computers, the present may only exist for milliseconds. A long-term investor has a very long present: the time between the buy and the sell.
  • TedTed
    @hawleyl: Excellent response !
    Regards,
    Ted
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