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Saturday, May 25, 2013

Be a Stock Investor rather then Stock trader

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Greetings from LiveBombayStockExchange, your one stop website for stock market investment tips and more.

Majority of us fall in trap when we become stock trader but wanted to become stock investor. Working of a stock trader and stock investor is totally different, like it is the task of stock trader to speculate whereas Stock investor are those who put their money in one company after thorough analysis and they think like they are kind of owner of the company in which they invest.

There is lot of difference between stock traders and stock investors ie. Stock traders are the ones who gets engulfed by half dozen computer screens and a dozen telephones and look like jokers while speculating/trading, whereas stock investors are calm, composed with expressions similar to one we see on Warren Buffett's face. There are lot of reasons for not becoming a stock trader rather becoming a stock investor. Top three reasons for which I hate stock traders are following:

1)Trading commissions can rack up quickly, dramatically eroding returns.
2)There are other trading costs in terms of the bid/ask spread. These more hidden frictional costs are typically only a small fraction of the stock price, but they can add up to become huge in numbers if done on daily basis.
3)Frequent stock trading is not tax efficient, and foolish traders end up paying more taxes thus trading greatly diminish returns.

One can easily become very good investor if he has atleast following four traits:

1) Thoughtful character
2) Patience while holding
3) little Abitlity to foresee future.
4) Turn of the TV and stock market daily updates.

If interested in stock investing you can further increase your knowledge by reading my post on Warren Buffett Way


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