Active Trading Vs. Value Investing

[MadMarketScientist 11]

Many traders believe there's a system that can pick tops and bottoms in prices. In fact, a whole technical analysis industry is built on these theories.

 

On the other hand, value investing is about knowing the value of a business and paying less than that amount. The difference between the value and the price you pay is your margin of safety (or margin for error).

 

What does everyone here think about value investing? Do do you do it? Is it an IRA-only strategy? Do you use it in conjunction with active trading?

 

thx

MMS

[gosu 10]

Many traders believe there's a system that can pick tops and bottoms in prices. In fact, a whole technical analysis industry is built on these theories.

 

On the other hand, value investing is about knowing the value of a business and paying less than that amount. The difference between the value and the price you pay is your margin of safety (or margin for error).

 

What does everyone here think about value investing? Do do you do it? Is it an IRA-only strategy? Do you use it in conjunction with active trading?

 

thx

MMS

 

By your definition of "value investing," the public or people who buy stock for an IRA are not value investing. People who need IRAs know shit about the value of a business they think they are buying into much less pay lower for it. Despite what is taught in high school classrooms that shares of a public company represent partial ownership in its blah blah blah, unless you own enough shares to control or influence control, stock in a public company is a speculative instrument.

[SIUYA 11]

- value investing is still all about price and the right price. The problem with most people trying to value invest is time and skill to find value, time to sit and wait for the value to be revealed. Then the same principles apply for trading......you dont take every value trade, only the high probability ones.

[Do Or Die 10]

Value investing is all about the asset itself.

Active trading is about direct forces of supply/demand which are effective in short-term.

 

They are complimentary to each other, why compare them at all.

[MadMarketScientist 11]

- value investing is still all about price and the right price. The problem with most people trying to value invest is time and skill to find value, time to sit and wait for the value to be revealed. Then the same principles apply for trading......you dont take every value trade, only the high probability ones.

 

Yes I agree the biggest problem with Value investing is having the discipline to wait and wait for the value to be revealed. In fact, this is one of the reasons why I like options trading vs. buying stocks as it forces a timeline on the trade for me.

 

MMS

[MadMarketScientist 11]

Value investing is all about the asset itself.

Active trading is about direct forces of supply/demand which are effective in short-term.

 

They are complimentary to each other, why compare them at all.

 

Not really comparing them, just wanted to see if people do both or are they strictly in one camp

 

MMS