Trading Vs. Value Investing

Discussion in 'Professional Trading' started by Opulence, Apr 1, 2012.

  1. Opulence


    I'm not sure where exactly to post this since it's on the subject of both trading an value investing.

    I want to get some opinions from some veteran traders and investors. I've been trading for a little under a year. To learn trading, I read books on the subject of technical analysis, macro-economic indicators, market indicators, specific trade strategies (IE: Livermore), books on the market's history, and so forth.

    Recently, I've been reading books on value investing. I've read Seth Klarman book "Margin of Safety," books by Benjamin Graham & Dodd, etc.

    With that being said, how do you all view trading vs. value investing? Is it a one or the other type of thing? Or do you trade for a living, but use value investing as more of a long-term growth plan?
  2. I have started off as a trader. After I have mastered trading and became successful at it, I started a Hedge Fund and nowadays, I cannot get in and out of a position like I used to be. Thus, my positions tend to be much longer in duration. I tend to hold onto positions on average a year or more. In that sense, I have become an investor.

    Basically, any trading or investing is "value investing" for a trader or an investor only buy what they think is undervalued and is poised to move up, or they would only sell something they think is overvalued and would move up. But, the quantification of this value, and the duration of the holdings is where most differ. Everyone is a value trader/investor.

    A trader would normally hold onto positions less than a year, while a investor holds onto a positions at least a year or more. And an investor would use fundamental analysis for the valuation purposes, while the trader uses technical analysis to assess value. But, there are many who combine them both as well. You cannot go wrong with either as long as you master your quantification/valuation metrics.