Investing In Stocks Vs. Trading Stocks

Today’s world moves fast and people are impatient. They want things now rather than wait till later when they can afford them. We see this in almost every aspect of modern life and it is fueled by credit cards and debt.

Trading Stocks

Frequently trading stocks (which includes day trading) is a product of this modern mentality. For traders, it is all about the short term prospects of a stock. They want to get in and get out, all in a short period of time so they can move onto the next trade. Many times traders don’t even care or know much about what a company does! All they are interested in is a quick buy and sell where hopefully they come out on top. 

Making a lot of trades is a hard way to make money, especially for someone who isn’t a professional. Please see my three reasons why frequent stock trading is a losing strategy for most people. Yet so much of the stock advice that is readily available in the media today focuses on the short term reasons why you should buy or sell a stock. 

Trading stocks is popular now but I think for most people, investing in stocks is more profitable.

Investing in Stocks

I rarely buy a stock with the intention of selling it in a week or even a month (although I sort of did this with my first stock pick for my $150,000 portfolio). I much prefer to be an investor who makes money by buying stocks of companies that are poised to do well in the long run. I don’t make a lot of trades and most of the stocks I buy end up being in my portfolio for a year or longer. 

If you want to be an investor (I define that as someone who takes a longer term time horizon strategy), please be careful when reading all the stock analysis news in magazines, television, and on the Internet because usually the analysis is coming from a short term perspective. Its all about what will happen to a stock in the next couple of months.

The stock market gurus of 2013 (and beyond) want to prove they can pick winners that will make money right away, rather than years from now. They want you to follow along and do as they do, thus making more money for the industry as a whole. For them, it is all about instant gratification rather than learning how pick companies that are set up for long term gains.

But investing in stocks  for me is a game of patience. There is no need to rush out and start buying stocks just so I can feel like I am in the game. I will wait and look for companies that I feel are poised to do well over a number of years and that is why it may be quite a while before my $150,000 portfolio is fully invested. 

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