“Markets are constantly in a state of uncertainty and flux and money is made by discounting the obvious and betting on the unexpected.” -George Soros
“I never attempt to make money on the stock market. I buy on the assumption that they could close the market the next day and not reopen it for five years.” -Warren Buffett
Most of you know that I am a huge Buffett fan, and I consider myself an investor like him. (Well, maybe not like him, but an investor nevertheless.)
George Soros is more of a trader.
One is not right and the other wrong. Buffett and Soros both have billions of dollars to prove that.
But it is important to know which one you are…
The Stock Investor
The stock investor invests in the company, not the stock.
Investors generally plan to hold the stock for a very long time, if not forever, through all of the market’s ups and downs.
They can see that the company is growing and profiting and they, therefore, pay little attention to the actual price of the stock.
The Stock Trader
The stock trader is much more concerned with the stock itself.
A recent fall in a stock price could mean quick gains if they buy while it’s low and hopefully sell high.
A very risky form of trading is know specifically as day trading. Day traders have often lost more than they have earned in their life. It’s basically a gambling addiction.
That isn’t to say that all trading is bad. George Soros is extremely good at it; however, I personally believe he is a mathematical and economic genius. So that probably helps him out a little.
There are also several other types of trader, including position trader, swing trader and scalp trader.
Without further ado, let’s figure it out…which one are you?
You Might Be An Investor If…
- You know and understand the company
- You don’t care about the stock price
- You often buy many of the same stocks
- You analyze the company’s information
- You buy for the company, not the stock
- You don’t pay attention to trivial news
- You don’t get excited about daily changes
- You invest in stocks with long-term value
You Might Be A Trader If…
- You sell your stock anytime it spikes in price
- You sell your stock anytime it drops in price
- You look for stocks with short-term gains
- You pay attention to every piece of news
- You constantly buy many different stocks
- You pay attention to every price change
- You don’t know much about the company
- You buy the stock, not the company
This is not an exhaustive checklist by any means.
This is not the begin all, end all of trading and investing.
The important thing is that you use wisdom in your financial decisions. If you don’t know what you are doing, they can both be dangerous.
Investors and traders are always happy when their stock price is up, the key difference comes in what you do when it goes down.
Before you try to do either one, do your research. Your retirement will appreciate it.
Speaking of retirement, you may want to read Retirement 101 or 3 Ways to Start Your Retirement for $100 or less.
Photo Credit: Fabrizio Sciami, World Economic Forum, Javier, Daniel Kulinski
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