Monday, April 27, 2009

Is Trading an Investment?

Today I have seen the Advertisement in the local news paper from very reputed Brokerage House. The advertisement was like this,

“In a slow market, every paisa matters. That’s why ****** (Brokerage House), the complete financial Super Market, offers you one of the lowest brokerages in the market.

With ***** Trading Account, you pay only 1 paisa for every Rs.100 worth of stocks and/or commodities Traded Intra-day. That means each paisa that you Invest works harder for you – helping you invest more and save more…!!!”

I really can’t understand that, why everybody uses the term ‘Trading’ & ‘Investment’ interchangeably?

Is Trading an Investment? Why such type of Brokerage Houses & Large Investment firms misguide the people? Why they call Trading an Investment?

Remember, Trading is not at all an Investment (According to the book ‘The Intelligent Investor’ by Benjamin Graham, The Guru of Warren Buffet.)

Not everyone in the market who buys and sells securities is an Investor. Trading is not an Investment but its a Speculation.

Unfortunately Media Channels, Financial Advisors & Brokerage houses consider everyone who buys or sells securities as an Investor. No matter at what price they buy, at which fundamentals and for how much time?

According to them, if you buy penny stocks than also it is an Investment & you are an Investor. If you trade (Speculate) stocks than also it is an Investment. The word ‘Investment’ is become so much popular now a days that we use this word in each and every conversations.

But please don’t mix Speculation (Trading) with Investments…….!!!!!!!!!

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