Monday
Nov012010
Are We Traders or Investors?
Monday, November 1, 2010 at 11:15AMWritten by Michael Bigger. Follow me on Twitter and StockTwits.
There is so much debate these days about trading versus investing. Recently, I have heard some people say investing does not work and the only way to go is trading. At Bigger Capital, we trade very actively, yet we think this is nonsense.
We view investment as an activity that creates true wealth—basically, creating much output with relatively little input. We have been very successful investing. We made more than 600 times our investment on Innovative Fibers (a private investment). We did extremely well buying securities such as Amazon, Crocs, and others when no one wanted to own them because we held a long-term view about those securities that turned out to be correct.
Yet, we know that regardless of a security's intrinsic value, its price will fluctuate a lot in the short term. We view trading as taking advantage of those fluctuations. We are pretty good at that too.
Very few securities qualify for our investment capital. We usually commit to an investment once every three to five years. When that happens, we commit for size. In the meantime, we are very happy trading.
So I guess we are both of these animals. We trade and invest.
In addition, we are a business builder. We are building trading businesses, which, in a sense, is also an investment. You see the pattern here. The lines between trading and investing are often blurry. So if someone shows you the next Innovative Fibers and you decide to pass because you are a trader, please give me a phone call.
We view investment as an activity that creates true wealth—basically, creating much output with relatively little input. We have been very successful investing. We made more than 600 times our investment on Innovative Fibers (a private investment). We did extremely well buying securities such as Amazon, Crocs, and others when no one wanted to own them because we held a long-term view about those securities that turned out to be correct.
Yet, we know that regardless of a security's intrinsic value, its price will fluctuate a lot in the short term. We view trading as taking advantage of those fluctuations. We are pretty good at that too.
Very few securities qualify for our investment capital. We usually commit to an investment once every three to five years. When that happens, we commit for size. In the meantime, we are very happy trading.
So I guess we are both of these animals. We trade and invest.
In addition, we are a business builder. We are building trading businesses, which, in a sense, is also an investment. You see the pattern here. The lines between trading and investing are often blurry. So if someone shows you the next Innovative Fibers and you decide to pass because you are a trader, please give me a phone call.
Reader Comments