If we look at the top 10 richest people in the United States, all of them got their wealth from investing in the stock market: Bill Gates, Jeff Bezos, and Warren Buffett to name a few. The first two mentioned of the three started companies: Microsoft and Amazon, respectively. The third- Warren Buffet- bought companies in the stock market that other people started.
One lesson here is that you do not have to start your own company to become wealthy from stock investing. Instead- like Buffet- you could jump on the bandwagons of other people who start or run successful companies.
So, what is investing? Investing is putting some money down to buy a business and, over time, watching that business grow.
Gates and Bezos did not become rich with their little companies at first. Yes, there was some money in software and bookselling but not even close to the money they would make by taking their companies public and selling some ownership (in the form of stock shares) to lots of other people (investors). The “product” that made both billionaires was not early revenue for what their companies made or retailed but selling off some of the ownership they had in their creations.
By holding on to some of their own stock over time and watching it grow, their fortunes grew as well. Their stock which was once valued at relatively little compared to today is now worth much more… and thus their own net worths are much higher.
Warren Buffett- always towards the top of the list of “world’s wealthiest people”- built his wealth in a different way. He did not start a company similar to Gates & Bezos to make things like software or sell books+++. Instead, the business he created revolves around investing in other people’s businesses. He is not dealing in apps and retail items, but shares of stock and similar, driven up or down by OTHER people working at the companies seeking to maximize revenue & profit, which then rewards shareholders like Buffet.
Investing is not really complicated. It simply takes time for gains to be realized. Applying a kind of analysis called fundamental analysis, we look for important variables like:
growing earnings,
a clean balance sheet,
growing dividends, and
growing cash flow.
Fundamental analysis will be explained in more detail in a subsequent lesson. For now, see the word for what it is: it is an analysis of the most important fundamentals of a business. If that analysis shows those fundamentals:
improving, the stock is likely to go UP over time.
deteriorating, the stock is likely to go DOWN over time.
The differences between investing & trading can be argued with a variety of variables, but we tend to define it with a simple one that anyone can grasp:
Investing is buying something at a lower price and holding it for a lengthy period of time. That time is usually one year or longer and can be as long as 5, 10, 20, or even 50 years.
Trading is buying and selling a stock or a commodity on a shorter-term basis. More simply, trading tends to be FASTER than investing. The focus is on a short-term ROI not buy & holding.
A trader is also looking to buy low and sell high… but their target holding period might be as little as only 6 months or 3 months or 1 month. They might focus on trades aiming to be in and out in only a week or even a day. Day traders are working in hours or minutes, meaning they are seeking to harvest their profits the same day they buy in… and typically in only a portion of that day.
So, in summary, a simple distinction between investor and trader is basically tortoise and hare. Unlike the fable though, BOTH can win the profit-accumulation race. They just tend to run it at vastly different speeds.
Another distinction is in the type of analysis typically used by each. With that longer time horizon, investors tend to lean on fundamental analysis more than others… while traders seeking faster outcomes tend to lean more on something called technical analysis.
In simplest terms, Technical traders look for patterns and technical rationale for why a stock is likely to move up or down in the near term.
It uses many different indicators and oscillators along with support and resistance projections and supply and demand to dictate WHEN to buy and sell. Traders learn to recognize chart setups in support of ideas about what is about to happen to a stock or future, fund or option, and then take a buy or sell action when all looks right. In subsequent lessons, we will also further explore technical analysis as we use it quite a bit for much of what we do.
A simple analogy is to think about a house as an investment. A home:
investor might buy and hold that house for up to 30 years before they might cash out. On the positive side, since they held this investment for a long time, they would have long-term capital gains and certain advantages therein. However, they also tied up a lot of money for an exceptionally long time in this investment.
trader might have a tag associated with them like “flipper.” They buy a home, perhaps do a little upgrading, then flip it in pursuit of a quick profit. On the positive side, the rapid flips mean they can use and reuse the same money over and over again in new investments. However, they would face short-term capital gains and the disadvantages therein.
Unlike dealing with a tangible buy & sell scenario like real estate, investing or trading in stock, options, funds, or futures offers a tremendous advantage in buy & sell transactions being completed in seconds with little to no fees.
In 2022, the:
musical artist Taylor Swift made over $100 million selling her mix of products: music, live shows, etc. She worked extremely hard to do that and is incredibly talented. She is considered a great success for what she does.
top 10 traders all made billions. Yes, that billions with a B. None of them has the artistic talent of Taylor Swift, but they have a very different set of skills & experience to make that money.
The purpose of this website is to help you achieve your financial goals. None of our team is Taylor Swift either, but we do know the top trading techniques. Our leader- Sal Giamarese- has more years in trading bull, bear, and flat markets than Ms. Swift has lived. Let us help you learn to trade well, and the sky is the limit.
Our team has extensively trained in fundamental, technical, and a third kind of analysis we’ll also cover in subsequent lessons. We are great at all 3 forms of analysis and use that three-dimensional view when we invest AND trade.
The point of this lesson is NOT to lead you to make an “Am I an investor or trader?” choice. You- like us- can be BOTH. If we revisit the house investing analogy, many flippers tend to own a home too- their main home (the one they live in)- so most flippers are BOTH a long-term home investor and a short-term home trader/flipper in the different homes they buy, renovate, and sell.
It works the same in stock, futures, and ETF investing. You may have some positions- particularly in things like IRAs & 401Ks that you hold for many years… as an investor. But you could also jump on a hot stock now with an eye towards selling it in a few weeks for a quick profit… like a trader.
Another distinction of investing vs. trading is you do not need to be as actively monitoring your investments every day or every week. Traders need to be more engaged, knowing what is going on, as they need to be ready to buy or sell with great agility if they want to maximize profit.
This is where our expertise can help. Sal has nearly 40 years of experience through all kinds of market scenarios… including biggies like black Monday, 9/11, the 2008 crisis, and the COVID crash. He is also ridden very bullish, multi-year waves between the bear events. He knows how to make money in BOTH of those… and those do-nothing flat markets too.
Leaning on his deep experience, our team knows where & when to buy & sell. We share such insights on this website, teaching those who want to learn through Educational offerings in the Investing Education menu and/or sharing actionable, cherry-picked trades one can easily place with their own broker through the service offerings in the Investor Recommendations menu. Follow us and we will do our best to help you prosper.
If we look at the top 10 richest people in the United States, all of them got their wealth from investing in the stock market: Bill Gates, Jeff Bezos, and Warren Buffett to name a few. The first two mentioned of the three started companies: Microsoft and Amazon, respectively. The third- Warren Buffet- bought companies in the stock market that other people started.
One lesson here is that you do not have to start your own company to become wealthy from stock investing. Instead- like Buffet- you could jump on the bandwagons of other people who start or run successful companies.
So, what is investing? Investing is putting some money down to buy a business and, over time, watching that business grow.
Gates and Bezos did not become rich with their little companies at first. Yes, there was some money in software and bookselling but not even close to the money they would make by taking their companies public and selling some ownership (in the form of stock shares) to lots of other people (investors). The “product” that made both billionaires was not early revenue for what their companies made or retailed but selling off some of the ownership they had in their creations.
By holding on to some of their own stock over time and watching it grow, their fortunes grew as well. Their stock which was once valued at relatively little compared to today is now worth much more… and thus their own net worths are much higher.
Warren Buffett- always towards the top of the list of “world’s wealthiest people”- built his wealth in a different way. He did not start a company similar to Gates & Bezos to make things like software or sell books+++. Instead, the business he created revolves around investing in other people’s businesses. He is not dealing in apps and retail items, but shares of stock and similar, driven up or down by OTHER people working at the companies seeking to maximize revenue & profit, which then rewards shareholders like Buffet.
Investing is not really complicated. It simply takes time for gains to be realized. Applying a kind of analysis called fundamental analysis, we look for important variables like:
Fundamental analysis will be explained in more detail in a subsequent lesson. For now, see the word for what it is: it is an analysis of the most important fundamentals of a business. If that analysis shows those fundamentals:
The differences between investing & trading can be argued with a variety of variables, but we tend to define it with a simple one that anyone can grasp:
A trader is also looking to buy low and sell high… but their target holding period might be as little as only 6 months or 3 months or 1 month. They might focus on trades aiming to be in and out in only a week or even a day. Day traders are working in hours or minutes, meaning they are seeking to harvest their profits the same day they buy in… and typically in only a portion of that day.
So, in summary, a simple distinction between investor and trader is basically tortoise and hare. Unlike the fable though, BOTH can win the profit-accumulation race. They just tend to run it at vastly different speeds.
Another distinction is in the type of analysis typically used by each. With that longer time horizon, investors tend to lean on fundamental analysis more than others… while traders seeking faster outcomes tend to lean more on something called technical analysis.
In simplest terms, Technical traders look for patterns and technical rationale for why a stock is likely to move up or down in the near term.
It uses many different indicators and oscillators along with support and resistance projections and supply and demand to dictate WHEN to buy and sell. Traders learn to recognize chart setups in support of ideas about what is about to happen to a stock or future, fund or option, and then take a buy or sell action when all looks right. In subsequent lessons, we will also further explore technical analysis as we use it quite a bit for much of what we do.
A simple analogy is to think about a house as an investment. A home:
Unlike dealing with a tangible buy & sell scenario like real estate, investing or trading in stock, options, funds, or futures offers a tremendous advantage in buy & sell transactions being completed in seconds with little to no fees.
In 2022, the:
The purpose of this website is to help you achieve your financial goals. None of our team is Taylor Swift either, but we do know the top trading techniques. Our leader- Sal Giamarese- has more years in trading bull, bear, and flat markets than Ms. Swift has lived. Let us help you learn to trade well, and the sky is the limit.
Our team has extensively trained in fundamental, technical, and a third kind of analysis we’ll also cover in subsequent lessons. We are great at all 3 forms of analysis and use that three-dimensional view when we invest AND trade.
The point of this lesson is NOT to lead you to make an “Am I an investor or trader?” choice. You- like us- can be BOTH. If we revisit the house investing analogy, many flippers tend to own a home too- their main home (the one they live in)- so most flippers are BOTH a long-term home investor and a short-term home trader/flipper in the different homes they buy, renovate, and sell.
It works the same in stock, futures, and ETF investing. You may have some positions- particularly in things like IRAs & 401Ks that you hold for many years… as an investor. But you could also jump on a hot stock now with an eye towards selling it in a few weeks for a quick profit… like a trader.
Another distinction of investing vs. trading is you do not need to be as actively monitoring your investments every day or every week. Traders need to be more engaged, knowing what is going on, as they need to be ready to buy or sell with great agility if they want to maximize profit.
This is where our expertise can help. Sal has nearly 40 years of experience through all kinds of market scenarios… including biggies like black Monday, 9/11, the 2008 crisis, and the COVID crash. He is also ridden very bullish, multi-year waves between the bear events. He knows how to make money in BOTH of those… and those do-nothing flat markets too.
Leaning on his deep experience, our team knows where & when to buy & sell. We share such insights on this website, teaching those who want to learn through Educational offerings in the Investing Education menu and/or sharing actionable, cherry-picked trades one can easily place with their own broker through the service offerings in the Investor Recommendations menu. Follow us and we will do our best to help you prosper.
Question or Comment?