Traders vs. Investors

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Special report: A far from random walk from Wall Street - Yahoo! Finance

I think the pundits must be reading my posts as I just posted something a few hours ago to the fact that investors have been burned for the last 10 years with the mantra of "Buy and Hold" (equities) and the "sage" advice that "Stocks are your best investment." (Really? You really sure about that, SavingAdvice Professors?)

And "Just be patient."

Well, there's an old saying: "Patience is a virture. Too much patience is no ambition."

That being said. . .I know the market is a dynamic between an Investor and a Trader. The traders may have "won" the 2000-2010 decade. I think if you are a trader (Gambler), the best strategy for you right now would be to just park your investments for a boring ride upwards. Switch to being an investor vs. a swing trader or a day trader.

The only fundamental going against equities right now as far as I can see is the aging population/Boomers conversion into debt investments. That being said, I think a lot or most of it has probably occurred after the housing bubble crash.

I know I am going to be reducing my portfolio's concentration in silver soon (have a bottom on it) and going more equities for the next 10 years.

[gambler2075]

I think for the vast majority of people, investing is better than trading. There are a lot of things that kill a novice trader that are hard to unlearned. However, for those that have paid their dues learning to trade, imo it is better to be a trader. Different strokes for different folks.

G

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I just saw an advertisement for New York Life and it said if you put a $15,000 payment into a Whole Life Policy in 9/30/00 and someone else, on the Advice of Saving Advice.com put the money into the S&P 500. . .the whole life person would have $21,837 and the person who put it into the S & P 500 would have $14,367. . .a slight loss.

I mean, gawd. . .I know they are picking and choosing the dates and so forth and I can see through their spiel.

But it does stop and make you think about the advice we've been handing out here (and I am just as guilty). . .was it necessarily wrong? No, it was non-contrarian advice, one that followed the "mainstream". . .but still, I'll admit I feel a little guilty about that as a person dispensing opinions here.

An investor shouldn't have to wait 10 years to realize even a paper gain.

Just my opinion.

[fiscallyprudent]

choose etfs and low cost index funds. over the long term you won't go wrong.

[kork13]

That article is too short-sighted. Yes, in terms of index levels today vs. some day in the past, it's not great. But there are other factors that would reassure a proper investor. First off, dividend gains (I am--and have been--receiving about 2% dividend returns completely aside from the day-to-day value fluctuation of my investments). Second, DCA-based gains (we've been buying through the entire period it was wicked low, so we've made value gains there).

Those are just the two biggest factors that immediately come to mind. No offense intended at all, but all the worry about the markets being 'essentially stagnant' is just noise. I've been investing for a little over 5 years, and even with today's depressed market levels, I've made money. The "investors" who are worried about the present situation aren't investors--call them, perhaps, long-term traders. An "investor" mindset, by definition, isn't concerned with a single moment's values, because we know that over the long-term, we're still making money.

[disneysteve]

DCA-based gains (we've been buying through the entire period it was wicked low, so we've made value gains there).

all the worry about the markets being 'essentially stagnant' is just noise. I've been investing for a little over 5 years, and even with today's depressed market levels, I've made money.

Exactly what I was going to say. The hypothetical example of an investor who dumped a lump sum into the market 10 or 12 or 15 years ago doesn't represent the average investor. Most of us put money in a little at a time either through payroll deduction to a 401k or 403b or an automatic investment plan on our own with a mutual fund. Between DCA and dividends, someone who has been investing steadily over the past 10 years hasn't lost anything at all.