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Strategies & Market Trends : DAYTRADING Fundamentals -- Ignore unavailable to you. Want to Upgrade?

To: KymarFye who wrote (15143)	2/4/2002 12:55:47 AM
From: Dan Duchardt	Read Replies (2) \| Respond to of 18137

KF, It's very difficult for me or to identify the precise moment at which investing turns into speculating or vice versa, or, more generally, to separate symptoms from causes and chickens from eggs in this discussion. We can agree on that. I do not suggest that investing is, or should be, without risk, or that it involves no speculation. Investors who cannot tolerate risk put their money to work in fixed interest issues that have a proven track record of paying the advertised return. Even those can fail, but the probability is low. A more daring investor is willing to risk wealth in the belief that a company has value because there is a market for their products or services. They speculate about the ability of the company to continue to produce and increase market volume, improve margins, do what it takes to earn more in the future, and that sets them apart from the opposite extreme of a pure trader who cares about nothing more than a belief that a stock can be sold at a higher price than was or will be paid to obtain it. Between two extremes there is a spectrum of market participants, and I doubt anyone can say exactly where you draw the line between investor and trader because I don't think it is a black and white distinction, nor do I think that every individual has to live exclusively in one camp or another. I don't think being unable to draw a nice crisp line in any way diminishes the fact that there are investors or at least would be investors who wish to participate in a market where return on investment depends on their ability (or somebody they trust to act on their behalf) to understand what a company does and forecast its growth without having to see their net worth going through wild gyrations because of an over-abundance of participants who don't care about anything but the trading potential, and actually want (and in many cases attempt to create) the wild ride to enhance their ability to siphon wealth from the machine. I don't claim to know exactly where it is, but I'm inclined to believe there is a point of balance between investors and traders where both types of participation are potentially rewarding. I'm quite sure we moved extremely far away from that point, and may still be far removed from it. Maybe the market is self correcting after all, and the balance will be restored, but it will only happen if the investing end of the spectrum keeps putting their wealth into the game. If those folks all decide the game is no longer worth playing the game will be over for all of us. Nobody can take wealth out of the game if nobody is willing to provide the fuel to keep it going. Dan