The concept of investing is as old as business commerce itself. In its purest form, an investor supplies the capital (money) needed by a business concern, and in return, the business concern grants the investor an ownership stake in the business, or “shares.” Under such an arrangement, both parties are hoping that the business will grow in value; hence the investor’s stake grows in value as well. hult private capital reviews

One form of business investment occurs when a corporation offers a portion of its stock to the public (“IPO,” Initial Public Offering). Such offerings usually raise millions – or even billions of dollars of capital. In return, the investors who have purchased the stock each own a piece of the company’s equity.
Stock trading differs from investing when you consider that trading (for profit) relies on the fluctuations of the stock value itself. Investing, on the other hand, relies on the growth of the company who has issued the stock.

For instance, let’s say that Joe Investor purchases 1,000 shares of a company’s Initial Public Offering for $10 per share. Joe is thinking that this is an excellent investment since the company is expected to grow by a factor of 20 during the several years. If this pans out, his initial $10,000 investment will be worth approximately $200,000.

Now let’s say that the word gets out about this company, it’s future is looking quite promising, and suddenly everyone wants “in.” Because of the high demand for the stock, it is driven up to $20, then to $40. Other investors notice the new “hot” stock issue, and in a mad buying frenzy its price is driven up to $100 within a matter of days.

What just happened? The company hasn’t changed, it hasn’t made one penny, and it hasn’t expanded. Yet, Joe’s initial $10,000 investment is now worth $100,000! If Joe wanted to, he could sell his shares right now for a 10-to-1 gain rather than wait for many years to (maybe) realize his goal of a 20-to-1 gain.

Probably, Joe will sell. In this case, he has made a trade – trading the stock for cash. His profit, while large, did not result from the underlying company’s success, but rather his profit is purely the result of investor speculation. Additionally, those who bought Joe’s shares could turn around and sell them to someone else, again, another trade. This is the fundamental difference between investing and trading.

Nonetheless, the terms investing and trading have come to mean the length of time that one intends to hold on to stock. Today, the terms investing and trading are used almost interchangeably – with the distinction of time. One is “investing” if the buyer of stock intends to hold on for a long period of time; one is “trading” if the stock is held for a very short period of time.
This distinction is important to understand more from a philosophical point of view than a technical one. For whatever reason, the activity of “trading” is considered politically incorrect by the mainstream media. Some anti-trading advocates go so far as to imply gambling addiction and other questionable morality associated to “trading.”

Yet, in today’s market, every stock purchase is, in fact, a trade. Unless one is participating in an Initial Public Offering, not one penny of a stock purchase goes into the company, so one isn’t really investing at all. They are all trades, albeit some of them with longer time horizons than others.

In spite of its social taboo, trading differs in “investing” only in technique. Both the trader and investor share the same goal – to profit. While convincing arguments can be constructed for both techniques, the point is that “moral” implications about trading should not be a factor and need not be part of the debate.

Long-term investing advocates are quick to point out that many people have lost fortunes in day-trading and other forms of stock market “gambling,” hence its ill repute. On the other hand, the “investor” is certainly not immune from losing vast sums of money, which by now is painfully obvious to thousands of speculators who held on to sinking technology issues throughout the year 2000.

“Investors are the real gamblers,” said the legendary 19th Century trader Jesse Livermore. “They make a bet and stick with it, and if it doesn’t go their way they lose everything.”
In truth, successful trading demands a skill not unlike any other profession that requires precision, else misfortune. In the hands of a skilled surgeon, a heart transplant goes smoothly; attempted with no education would be certain death. Stock trading is no exception.

Vulcan Oracle is all about trading, although the technical distinction between trading versus investing is paper-thin. Considering that the only real distinction is time (that one holds on to a stock), I must emphasize the following approach to my strategy.
I have no fixed rule about time. I may hold a stock for five minutes or five months, all that matters is that I maximize profit and minimize losses.

It surprises me that this concept is somewhat of a “new” idea. Both the investor and the day-trader have a very fixed idea about time. The investor is in for the long haul, through thick and thin, come hell or high water, while the day-trader specializes in split-second shaving of fractions off of intentional same-day trades. I find it odd that neither of these approaches consider maximizing profit. Rather, they emphasize time as the senior consideration.

Although an alien idea to many, consider the following strategy: to own a stock as long as it is rising and not own it otherwise. In volatile markets this will look like day trading. In steadier markets it will look like investing. Senior to it all is profit!