Long-term investing or short-term trading?

klarklar

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A question for the experienced investors here. Which one is more profitable? Long-term investing or short-term trading?

From personal experience, the very successful ones I heard got rich from long-term investing. Does this observation agree with your own?
 

Some-one

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Yes. I believe with this thread, there would be a lot of short term trader coming in to tell you otherwise. I must first say that I measure my return using annualised return.

Unless you can time the market well and can buy at the low point and sell at the high point, long term investing makes more sense.
 

kebinu

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I like this kind of topics. Both can be profitable, I'll go for both!

The initial capital will be an important factor. Long term investing sounds good, but need a proper capital to see some return. Trading on the other hand require a much lower capital outlay.

Next, doesn't matter which matter, it really matter if one is doing it right.

And many more factors, which I'm lazy to type an essay with my phone. Haha
 

alexchia01

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Investing and trading are 2 different things. Invest is to grow wealth, trading is to get income. You can't compare which is better. They are apple and orange.

Everyone should learn how to do both, but investing is more important than trading.

If you can only do one, then choose to do Investing.
 

killer

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different personalities will be needed to play into the different styles. rather than saying which is more profitable, it is better to ask which suits you better
 

netbookcraze

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If my counter went up within a few days of my purchase, then I am a short term trader. If the counter do not move much, I am a long term investor.
 

peterchan75

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It depends very much on the counter. Bought Kep corp, UOB, Chartered Semi, and NOL in the early 90s. My returns would have been better if I have gotten rid of Chartered and NOL. err.. I halfed Kep corp whenever it doubled... sigh. Kept Chartered until it kaput. Not all counters are created equal. Some are for long term and some are for trade. Don't overlook the skill of getting out of a position.
 

Dividends Warrior

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different personalities will be needed to play into the different styles. rather than saying which is more profitable, it is better to ask which suits you better

Well said.

Choose the one that suits you the most and stay the course.
 

sAVaGEmP5

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If u have lots of capital > 50-100m by all means long term. More money x long term = more money.

But if u only have 20k. Then little money x small and many profitable trades = more money.

Can u imagine putting 20k to long term of 10 yrs of which makes 3% annualized (or 30% for 10 yrs) taking into market cycle.

Thanks and u just made 30% * 20k which is just 6k for 10 yrs of investing, $600 for a year and $50 for a month. Be realistic.
 

Hyphos

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I buy stocks that I am willing to hold for at least a few years i.e. good dividends. However, I buy them at their lows and will sell when they rise high enough.
 

MikeDirnt78

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It depends very much on the counter. Bought Kep corp, UOB, Chartered Semi, and NOL in the early 90s. My returns would have been better if I have gotten rid of Chartered and NOL. err.. I halfed Kep corp whenever it doubled... sigh. Kept Chartered until it kaput. Not all counters are created equal. Some are for long term and some are for trade. Don't overlook the skill of getting out of a position.

humans have the tendencies of holding on to losses for too late and cutting on to profits for too quick.

your examples are good evidence as to why long term investing does work and can generate good returns to the overall portfolio. 1 or 2 good picks can easily cover up losses of many rotten stocks.

assuming your NOL and UOB returns are so so, you have loss 100% with chartered but would have gain >x10 with keppel corp if you choose to do nothing.
 
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peterchan75

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humans have the tendencies of holding on to losses for too late and cutting on to profits for too quick.

your examples are good evidence as to why long term investing does work and can generate good returns to the overall portfolio. 1 or 2 good picks can easily cover up losses of many rotten stocks.

assuming your NOL and UOB returns are so so, you have loss 100% with chartered but would have gain >x10 with keppel corp if you choose to do nothing.

Agree. But it would be nice if I could cut NOL bought at 5+ earlier. Now, I only give back a certain % of my profit or % of loss. I can always buy back if I am wrong.
 

MikeDirnt78

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Agree. But it would be nice if I could cut NOL bought at 5+ earlier. Now, I only give back a certain % of my profit or % of loss. I can always buy back if I am wrong.

the thing is you dont invest with a rear view mirror. if yes, you could sell chartered at the peak too and buy some more keppel or uob at the bottoms of any corrections.
 

Epps_Sg

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Put 90%~95% into long term investment which should preferably be passive/low cost/diversified - lower risk and lower rewards, but hopefully protect capital from inflations and make some gains, and minimise losses in case of sudden market crash.

Put 5%~10% capital, which you can afford to lose, into short term trading that is higher risk and higher gain. Some profits form trading can go into your long term investment too. The risk is limited to small upfront capital in this case. Trading involves tricky market timing, individual psychology, discipline and basically hard work. Note that some people are not suited for short term trading

For beginners, it may be better to start figuring out how to do long term investing first, preferably passive type of investing and minimise risk as much as possible, or value/dividend type of investing if you are capable of learning the ropes. This allows time to acquire knowledge of how market operates in preparation for learning how to trade shorter term. Try not to base short term trading mainly on indicators - it looks easy but is too 'ambiguous'.
 

MikeDirnt78

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If u have lots of capital > 50-100m by all means long term. More money x long term = more money.

But if u only have 20k. Then little money x small and many profitable trades = more money.

Can u imagine putting 20k to long term of 10 yrs of which makes 3% annualized (or 30% for 10 yrs) taking into market cycle.

Thanks and u just made 30% * 20k which is just 6k for 10 yrs of investing, $600 for a year and $50 for a month. Be realistic.

this is serious BS. :s8:

if i have that big amount of money, i will probably put 90 to 100% in FD. i can just live from the interests earned. and at most punt up to 10% into risky assets. why take higher risks to earn higher returns? unless you are greedy or ambitious enough to join the Forbes Asia Top 10 richest man club.

little money x small trades can equal to losing trades also. not just profitable trades.

if you have just 20k and if you choose to put in the banks, your money is guaranteed to lose out to inflation. at least if you put 20k into stocks with decent returns for the long term, this 20k can potentially generate more returns than the bank interests.

if you grab the statistics of all the bluchips (index stocks), you realise that most of them have gone up at least 2 or 3x times since IPO or the last 10 years (plus many yearly dividends). and if you happen to pick the bad ones (ie Cosco, Chartered, etc) your losses are limited to 1x only (without leverage). so your 2 or 3x profits outweigh the 1x risks in the longer term.

of course if you are really sucky at stock pickings, you will probably pick a basket of rotten stocks. then the failure in long term investing is not due to the strategy. its the person that is the failure.

as a long term investors, your objective is to pick potential and future bluechips. these stocks are most probably from the smaller and mid cap categories. because logically all the bluechips are unlikely to continue to outperform the index by so much as they are more stable and matured companies. then hold the stocks with discipline and patience.
 

Dyhalt

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this is serious BS. :s8:

When you have 50~100m... the purpose of your investment will no longer be just for capital gain... you'll more likely have interest in gaining control over the company or having a seat in the board of directors (For power, for control, for money:D)

Personally If your trading record is good I'll suggest going 70% long term and 30% trading. (Like most traders do).

If you find yourself losing money in most of your trading part of the portfolio then I recommend going Dividend Warrior style :s13: (Safe, Can sleep at night and stability)
 

Dividends Warrior

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When you have 50~100m... the purpose of your investment will no longer be just for capital gain... you'll more likely have interest in gaining control over the company or having a seat in the board of directors (For power, for control, for money:D)

Personally If your trading record is good I'll suggest going 70% long term and 30% trading. (Like most traders do).

If you find yourself losing money in most of your trading part of the portfolio then I recommend going Dividend Warrior style :s13: (Safe, Can sleep at night and stability)

Yes. I sleep well at night. :o
 

sAVaGEmP5

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this is serious BS. :s8:

if i have that big amount of money, i will probably put 90 to 100% in FD. i can just live from the interests earned. and at most punt up to 10% into risky assets. why take higher risks to earn higher returns? unless you are greedy or ambitious enough to join the Forbes Asia Top 10 richest man club.

little money x small trades can equal to losing trades also. not just profitable trades.

if you have just 20k and if you choose to put in the banks, your money is guaranteed to lose out to inflation. at least if you put 20k into stocks with decent returns for the long term, this 20k can potentially generate more returns than the bank interests.

if you grab the statistics of all the bluchips (index stocks), you realise that most of them have gone up at least 2 or 3x times since IPO or the last 10 years (plus many yearly dividends). and if you happen to pick the bad ones (ie Cosco, Chartered, etc) your losses are limited to 1x only (without leverage). so your 2 or 3x profits outweigh the 1x risks in the longer term.

of course if you are really sucky at stock pickings, you will probably pick a basket of rotten stocks. then the failure in long term investing is not due to the strategy. its the person that is the failure.

as a long term investors, your objective is to pick potential and future bluechips. these stocks are most probably from the smaller and mid cap categories. because logically all the bluechips are unlikely to continue to outperform the index by so much as they are more stable and matured companies. then hold the stocks with discipline and patience.

Hi MikeDirnt78,

I noted your first line reply and will note your comments etc in the future. Thanks for the your view on my BS. With 50-100m, where did i in this thread say to punt it ? I said to invest, and I did not state it upfront FD, Fix income, properties, or another alternatives depending on your risk appetite.

And what risk are you talking abt ? Do you mean with a higher capital i shld invest in lower safer returns, equating to higher risking with a lower capital ?

Do u know good prop and HFT uses very little capital to generate alot of turnover and profits ? I run my own day trading over algorithms so you maybe you finding trading impossible cos u dun make profits hence it gives u that impression ?

Give me a realistic figure on how much u can generate in 10 yrs? 15-30% or 500% 2000% ?? Nvm, i let those who willingly parked their 10-20k for 10-20 years and take the profits to see if its worth the effort all along. Not sure if its enough to even fund a simple Europe trip after 10 yrs.

Remember, u invest in mutual funds, u pay mgmt fees, u trade urself u have high comms to pay. U use Interactive Brokers on $1 per trade, u have subscriptions, market data and minimum fees. The hard truth.

So is this the BS u (u guys) wanna hear ?
 

MikeDirnt78

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With 50-100m, where did i in this thread say to punt it ? I said to invest, and I did not state it upfront FD, Fix income, properties, or another alternatives depending on your risk appetite.

And what risk are you talking abt ? Do you mean with a higher capital i shld invest in lower safer returns, equating to higher risking with a lower capital ?

i think its quite clear from your quotes below that you were saying anything <50M, its not worth to go long term. and its quite clear this thread is all about short term trading vs long term investing.

and when did i ever mention that i said you recommended to punt? my previous points are quite clear. just to summarise.

1) you dont need >50M to invest. you can start investing any amount you want.
2) if i have >50M, i rather take a cautious approach with my big money. i can choose NOT to invest. instead put ALL of them in banks (reasons stated above).

by the way, investing equates to putting our money (with the intention to hold for a period of >1 year) into other risky assets like bonds, properties, stocks, etc but NOT banks. because the latter is considered a pure savings play.

If u have lots of capital > 50-100m by all means long term. More money x long term = more money.
 
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