We in the BFSI space have made it look good to call yourself an Investor and crass and crude if you claim to be a trader. So even people who trade about 40% of their portfolio regularly will not admit to being a trader. They are more likely to tell you that “I am an investor who trades in between to take advantage of the price movement”. Damn it. You are a trader. Nothing wrong, but I have never been able to make out the distinction.
If you bought Wipro in 1980 and have held on till now collecting all the dividends, bonuses and splits – are you a trader, speculator or investor? Well Benjamin Graham would have called you an investor, because you did a lot of research…etc.
If you had bought land in Bengaluru in 1980 and waited till today for the usage pattern to change from Agriculture to non agriculture, would you be a speculator or investor? After all you got NO income and the ONLY hope is that somebody buys it off you and you make money.
What about gold bought in 1980 and held till today? Speculator or Investor or Trader?
I seriously do not have an answer. What if you had bought shares of Amazon and held till today? did you think of it as a company which is going to reform the world of buying things? This company has an insane PE ratio, has never posted a profit, and not capable of paying dividends (let us say this was true a few years ago for sure). Speculator or investor?
When I used to talk to investors – direct equity or mutual funds, I would ask them “the market is high do you still want to invest” -I would get 2 sets of answers. One was “i will sell it when it is higher” and the second answer would be “I any way invest only in equities..if there are some sectors which have not participated in this rally, I am fine…however if you ask me to do a SIP in an index fund, I am happy to do that with a 10 year time frame….” – you know one is a speculator and the second guy is an investor.
The techniques, and attitude of a speculator is different from that of an investor. The investor-traded is an inbetween animal who decides later on whether he is a trader or an investor. For example I bought Indigo from 800 to about Rs. 1100. If I sell it off today at say 1700, I would be a speculator (albeit long term gain) – however if I say “this is a good industry, growing well, Indian incomes are rising…and I hope to sell it at Rs. 17000 in a few years time” I am supposed to be an investor. Well, sorry Benjamin Graham, the world has moved on from that kind of your definition (go and Google the distinction that BG made between speculating and investing).
I have bought and sold shares in one day, one week, one year as well as held shares for 40 years. Clearly, there is a trader inside all of us who says “39% in 3 months….are you mad..you will get a chance to buy later on” – and many of us who will listen to it. If you buy with a view to investing, but the market takes the share to dizzying heights, YOU WILL SELL, will you not?
No. Frankly i do not know the difference, and frankly I do not care. I am not a professor sitting in some college trying to analyze Benjamin Graham’s language. Oops, that’s just not me.
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