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Are you a trader or an investor... do you know before you hit the buy button?
Posted on 5/3/15 at 2:12 pm
Posted on 5/3/15 at 2:12 pm
One thing I've found over the years is that stocks are very much like real estate: your profits are largely determined when you first acquire the asset. Buy too high, and even the best stock can be a dog of an investment in the short to medium term. And you can buy a dog (as a trade) and make darn good money on it in the short term.
As I read posts here and on other financial boards I'm on, I notice how frequently posters mix & match "investing" and "trading". So, if I may, what are you doing?
One wise sage I ran across years ago said it best: for many people, a "trade" becomes an "investment" once the stock drops 10% and the purchaser falls into the old quicksand philosophy of, "I'll hold it til I get even again!"
But anyway, I think a person can invest in certain stocks and trade others. Maybe even do both on the same security. But whether you use technicals or fundamentals (or the local barber) to help you decide on potential buys & sells, do you decide BEFORE purchasing what your goals are, or do you just roll the dice?
I've been there and done that, so I'm just curious how people here conduct their equity portfolio management.
As I read posts here and on other financial boards I'm on, I notice how frequently posters mix & match "investing" and "trading". So, if I may, what are you doing?
One wise sage I ran across years ago said it best: for many people, a "trade" becomes an "investment" once the stock drops 10% and the purchaser falls into the old quicksand philosophy of, "I'll hold it til I get even again!"
But anyway, I think a person can invest in certain stocks and trade others. Maybe even do both on the same security. But whether you use technicals or fundamentals (or the local barber) to help you decide on potential buys & sells, do you decide BEFORE purchasing what your goals are, or do you just roll the dice?
I've been there and done that, so I'm just curious how people here conduct their equity portfolio management.
3
Posted on 5/4/15 at 7:25 am to Jag_Warrior
I have a couple of ROTH accounts that I trade in, but my 401k is specifically for investing. I'm on track to retire comfortably if that is the only account I have, so even if I lose money in the ROTH, I won't be in the poor house. If I can make great returns there, it's just gravy.
Disclaimer: this is not financially "appropriate" advice. This is just how I do it.
Disclaimer: this is not financially "appropriate" advice. This is just how I do it.
Posted on 5/4/15 at 7:37 am to Jag_Warrior
I consider myself to be an investor. The accounts that I own, I rarely conduct any selling or exchanges. I mostly buy shares of mutual funds every pay period in my 401k and Roth IRA, and check the balances over time. I will spend a week or so near the beginning of each year reviewing my funds to keep the portfolio mostly stock funds (aggressive portfolio), rebalancing as needed.
I am not a financials guy, and I spent several hours learning about stocks and mutual funds my first 2 years on the job. I've since realized that there is too much extra work involved to work my day job and keep up with stock prices.
I am not a financials guy, and I spent several hours learning about stocks and mutual funds my first 2 years on the job. I've since realized that there is too much extra work involved to work my day job and keep up with stock prices.
Posted on 5/4/15 at 11:10 am to RickAstley
If someone is trading because they think it's a good way to get rich, they are almost invariably dumb and very likely to underperform. I trade because I like the joy of being right and I follow stocks any way.
Posted on 5/4/15 at 12:52 pm to Jag_Warrior
Investor
I buy and and once I buy, I have done my homework and don't plan to sell. I would like my kids to own the shares and dividend stream after I leave this earth. I plan to use the dividend stream in retirement.
I buy and and once I buy, I have done my homework and don't plan to sell. I would like my kids to own the shares and dividend stream after I leave this earth. I plan to use the dividend stream in retirement.
Posted on 5/4/15 at 4:48 pm to TheHiddenFlask
quote:
If someone is trading because they think it's a good way to get rich, they are almost invariably dumb and very likely to underperform. I trade because I like the joy of being right and I follow stocks any way.
Certainly as it applies to the majority of people who attend "day trading academies" and the like, I agree with you. But "trading" covers a broad category. For the past twenty years or so, I've successfully employed channel trading, or what some people call "rolling stocks". I don't day trade - never have, never will. Trying to scalp trades or catch the fractional, second-by-second ups & downs of an equity is just not a good use of my time or capital. If anyone is curious, here's a piece that explains channel trading pretty well.
Channeling
It's not for everyone. But if one is comfortable with technical analysis and not too proud to admit when a trade is soured (use stop-loss orders on ANY trade), this is a proven technique... if you do your homework. Find a good tradeable and then: in & out, in & out, in & out (and you can short on the upside top if you desire)... almost sounds dirty, eh? But when the charts tell you that the trend has been violated, STOP trading that equity in that fashion. Hanging around the well for too long will just cost you money.
When I invest, I mainly rely on fundamental analysis. Technicals may tell me something about what a good entry point will be. But apart from that, I just want to know if it's a business whose stock I want to own for the longer term.
Posted on 5/6/15 at 11:34 am to Jag_Warrior
I'm certainly not trying to rub salt in any wounds. But in looking over several of the stock threads here, I've noticed a theme that's common on many individual investor forums: riding stocks down to (IMO) excessive losses of 20% or more, in hopes of somehow, some way, someday "getting even again". Early on, I've done this too. It's very difficult for people to just go ahead and admit that they were wrong. One of the pieces of advice that really helped me was a gentleman I met at an investor conference, who said: "You buy a gallon of milk on sale. It seems like a great price. But you take it home and take a swallow. When you do, you realize that it's sour. Do you keep drinking it or spit it out and discard the carton? Getting rid of that carton will make room in your fridge for the next carton, which (you hope) is fresh."
Like I said, I'm not trying to rub any salt in any wounds. But I just saw one thread where a fellow admitted that he was down over 50% on a position, and he tried to rationalize it by saying that he was a "buy & hold investor".
Why? You don't get extra Heaven Points for riding a ship to the bottom of the ocean when it's sinking.
Do you think it's just a human trait that makes it hard for us to say, "I was wrong", while hitting the sell button?
Like I said, I'm not trying to rub any salt in any wounds. But I just saw one thread where a fellow admitted that he was down over 50% on a position, and he tried to rationalize it by saying that he was a "buy & hold investor".
Why? You don't get extra Heaven Points for riding a ship to the bottom of the ocean when it's sinking. Do you think it's just a human trait that makes it hard for us to say, "I was wrong", while hitting the sell button?
This post was edited on 5/6/15 at 11:35 am
Posted on 5/6/15 at 11:50 am to Jag_Warrior
Im more of a swing trader vs a day trader.
I dont have time to watch the candle sticks paint on the 2min chart.
With that said, I have a hard time Investing or "going long" with all the volitialy in the market.
Most of my best swing trades are days to weeks, not months to years.
MU was a good swing last year that covered a couple of months.
Scalping almost got my head cutoff financially, so I steer clear of those tactics.
currently, PBTI is fun to watch but its going to crash & burn at some point in the very near future.
Lotta short squeezing going on there.
I dont have time to watch the candle sticks paint on the 2min chart.
With that said, I have a hard time Investing or "going long" with all the volitialy in the market.
Most of my best swing trades are days to weeks, not months to years.
MU was a good swing last year that covered a couple of months.
Scalping almost got my head cutoff financially, so I steer clear of those tactics.
currently, PBTI is fun to watch but its going to crash & burn at some point in the very near future.
Lotta short squeezing going on there.
This post was edited on 5/6/15 at 11:53 am
Posted on 5/6/15 at 11:55 am to Jag_Warrior
I know somebody that rode RIG to the bottom recently, more than 50% loss. six figure investment gone sour. I told him to cut it loose before Oil really tanked a couple months ago.
People dont listen when greed & ego gets in the way.
People dont listen when greed & ego gets in the way.
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