-BO- wrote:
Cloudy wrote:
I think I'll pass. I took a peek at the links you gave us, and I'm guessing that playing the games involves short term trading (guessing). That is something that takes too much time and effort than I care to get into. Worse yet, because it is basically guessing, I would probably lose, and I would destroy any credibility that I might have when it comes to the real world of investing.
Good luck, YODA, if you get into it, and feel free to ask me for advice when your guesses go the wrong way.
If short term trading is guessing, then what is long term trading?
Basically you choose stocks as an investment based on fundamentals, and that's fine. But it's still guessing. Short term traders pick stocks based on technicals as opposed to fundamentals, but whichever way you choose, there is still risk involved which is apparently guessing.
(I am not going to be talking about Wall Street gurus. I am going to be talking about the average Joe, who dabbles in the stock market in what follows.)
Of course there is always an element of uncertainty with investing, no matter what your philosophy might be. However, I think the questions here are the degree of uncertainty, how decisions are made to change investments, and how often.
Very few individual short term traders have the acumen to understand technicals, let alone make good decisions based on what they think they know. They are constantly hopping in and jumping out of stocks based on something they read on the Internet. Not only are they going to screw up a lot of times, they are also going to run up their transaction costs. They are attracted to the hot stocks of the day, which tend to be volatile. Volatility in these stocks subjects short term traders to surprises, which often cause them to start making decisions based on the emotions of greed and fear. At this point the average Joe begins guessing directed by his emotions. I know you can find exceptions to what I have written, but after more than a few years of experience, I can promise you that this is how it usually goes for the average Joe, who will have a lot of excitement, but will not do well over the long run.
Yes, long term investors also have an element of uncertainty when they build a portfolio, and every once in a while they will change the stocks they hold. However, their stock selection is normally based on fundamentals such as price to earnings ratio, earnings growth, dividend payout, historic trading range, basic company strength, and other unexciting things that make sense to consider. For the most part they don't react to hot tips from the Internet, and usually stay the course, unless there is a significant change in the fundamentals in a stock they hold in their portfolio. Though boring, this approach to the stock market will work over time. The
guessing long term investors make is based on something real, rather than Internet silliness and emotional reaction to it.
"Long term trading"...? This sounds like something that is self-contradictory to me. Trading is normally associated with buying and selling stocks relatively quickly. (Sometimes on a daily basis.) If you were referring to the fact that long term investors will change stocks in their portfolios for fundamental reasons, that is NOT what most would call "trading".