I find these debates over defining activities into discrete boxes like “trading” and “investing” actually do more harm than good. Even more harmful is the motivation for defining such terms which are often done to demonstrate superiority and the putting down of anyone who happens not to share the person's view on money making. One author I respect aptly terms it as "The grass is always inedible on the other side of the fence" syndrome.
This is a distraction at best and creates a false sense of assurance if worse. Any economic activity is multi-faceted with elements of both trade and investment; without generally acceptable codified principles to arbitrate we can all argue till purple face and nothing will come out of it.
Wikipedia defines a trade as “the transfer of the ownership of goods from one person or entity to another by getting something in exchange from the buyer” - That sounds like a decent enough description of an economic activity practiced by anyone who dabbles in the markets.
Investment is summed up as “putting money into an asset with the expectation of capital appreciation, dividends, and/or interest earnings”. - Again this is a generic enough definition that everyone can agree on and am practicing as long as they are participating in the markets be they short term / long term, chart reading / fundamental reading, psychology / rational, mechanical / non-mechanical etc.
I would also like to add one more term that most people do not like to be associated with – Gamble, which Wikipedia describes as “the wagering of money or something of material value on an event with an uncertain outcome with the primary intent of winning additional money and/or material goods” Sounds like what any market participant is doing as well.
My personal view (haha) is that as long as you are buying or selling a stock, a contract or a physical good / service with the intention of making money, you would have been involved in investment, trading and gambling. Now of course the exact mix of these 3 main elements will vary from activity to activity and a lot of times the participant might arrive at a different assessment of himself compared to what others may perceive what he is doing, but I do not believe in the false trilemma that any market participant is only doing one element to the exclusion of the other two.
This is a distraction at best and creates a false sense of assurance if worse. Any economic activity is multi-faceted with elements of both trade and investment; without generally acceptable codified principles to arbitrate we can all argue till purple face and nothing will come out of it.
Wikipedia defines a trade as “the transfer of the ownership of goods from one person or entity to another by getting something in exchange from the buyer” - That sounds like a decent enough description of an economic activity practiced by anyone who dabbles in the markets.
Investment is summed up as “putting money into an asset with the expectation of capital appreciation, dividends, and/or interest earnings”. - Again this is a generic enough definition that everyone can agree on and am practicing as long as they are participating in the markets be they short term / long term, chart reading / fundamental reading, psychology / rational, mechanical / non-mechanical etc.
I would also like to add one more term that most people do not like to be associated with – Gamble, which Wikipedia describes as “the wagering of money or something of material value on an event with an uncertain outcome with the primary intent of winning additional money and/or material goods” Sounds like what any market participant is doing as well.
My personal view (haha) is that as long as you are buying or selling a stock, a contract or a physical good / service with the intention of making money, you would have been involved in investment, trading and gambling. Now of course the exact mix of these 3 main elements will vary from activity to activity and a lot of times the participant might arrive at a different assessment of himself compared to what others may perceive what he is doing, but I do not believe in the false trilemma that any market participant is only doing one element to the exclusion of the other two.