Traders vs. Investors – What now?
08 Aug 2011 Leave a Comment
The market closed about 3.5 hours ago and since its close there have been, according to Google News, over 2,500 articles written about the market decline. Not that such a significant decline is not news – it is, but to who? Rather than add to DOW-MAGEDDON!!! Sorry, I couldn’t resist…
I thought I would share a few definitions from Investopedia.com, an online investment encyclopedia.
Trader
What Does Trader Mean?
An individual who engages in the transfer of financial assets in any financial market, either for themselves, or on behalf of a someone else. The main difference between a trader and an investor is the duration for which the person holds the asset. Investors tend to have a longer term time horizon, whereas traders tend to hold assets for shorter periods of time in order to capitalize on short-term trends.
Investopedia explains Trader
One main problem with engaging in short-term trading is commission costs. Because traders frequently engage in short-term trading strategies to chase after profit; they often rack up large commission fees. However, an increasing number of highly competitive discount brokerages has made this cost less of an issue.
What Does Correction Mean?
A reverse movement, usually negative, of at least 10% in a stock, bond, commodity or index. Corrections are generally temporary price declines, interrupting an uptrend in the market or asset.
Investopedia explains Correction
A healthy market will correct from time to time.
10% is a correction and a 20% decline is a bear market.
Again, investors with a long-term outlook should view this market decline as par for the course and not panic.
Finally…
Not to sound too political, but the long term economic challenges our nation is facing should transcend politics and should involve all individuals willing to address the hard questions with a since of compassion for the those of our population who have the least and are in need or will need assistant. The decisions are not easy but if the solutions falls disproportionately on the backs of the middle class, poor, and disenfranchised, then I fear we truly will lose our AAA ratings in the world.
