People say the darndest thing on Seeking Alpha.
Sometimes you can't imagine how silly some of the things they say, actually sound. When people do that, I usually have this reaction.
Now, no one will ever accuse me of being the sharpest knife in the drawer, but I did learn, a long time ago, to ask people questions about things that they say.
What happens is you begin to have a conversation and often, you can clarify their original intent and things begin to make sense to you, about what they have said.
But these days, people either get offended by anyone questioning them or even worse, they dig in their heels and cling to a really silly belief, because they can't fathom the idea that they may have been wrong.
It's inconceivable to them.
But, Why Is That?
I think that the reason that people say the darndest things on SA is because when they make a comment, they don't read the comment back to themselves.
For many of these people, reading their own comment out loud would be something that I would recommend that they do. That way, they can say, "Wait. What?" to their own comment, like the rest of us.
Just the other day a well meaning fellow said this:
My personal observation of what lots of people seem to do is tend to buy on valuation, but then tend to hold as an investment, not as a valuation trade.
There are others who buy on valuation, and sell on valuation, and I'd call them traders, not investors. They're not investing in the company, they're trading on the stock price. There's nothing wrong with that, lots of people follow the maxim 'buy low, sell high'.
My sense of it is most of the folks who buy here use valuation to buy things 'on sale', but really intend to hold for the long term and don't just as easily sell on valuation. But value investors should speak for themselves, I'm just giving me sense of what I've seen, since I'm not one.
It's that second paragraph that touched me. Some people buy on valuation and sell on valuation. I call those traders. Well, I don't call them traders at all. But then again, it's a matter of "opinion."
Expanding on his line of reasoning, our commenter said this:
Sure, it's my own POV. As far as I'm concerned, if you're trying to make money buying low and selling high, you're trading. For me, duration isn't part of the definition because duration has nothing to do with the analysis a trader would use. Valuation is almost inherently a shorter time horizon tool, though, and it drives you to trade in stocks versus invest in companies by focusing on analyzing stock prices and not corporate attributes.
If you are trying to make money by buying low and selling high, you're trading.
When I decided to ask this, the commenter chose to respond with a "I'm done with any more discussion."
It is clear from your response, that you are not willing to consider anything other than your own point of view.
That's sad. It makes learning new things difficult for people who can't absorb a different point of view.
Why do you buy a particular stock? Are you a dividend investor? A growth investor? Both? Neither?
When you purchase a particular stock, what is your hope for that purchase? For it to go down in price? Remain at the same price for a number of months? Or go up in price?
I'm really trying to grasp your logic and I find it perplexing because you haven't outlined your goals and strategy. So rather than go down some rabbit hole, could you answer those simple questions for me?
The response to my comment was kind of shocking. He said this:
No, let's just leave it here. It's my personal opinion and it really makes no difference whether you or anybody else agree; we all have to construct our own approach. And as you say, I'm sad closed minded person so I won't learn anything either.
But if you really want to understand my approach, goals, and all that you can search for me or whatever people do and it's all been laid out multiple times on other threads. Your question is a fair one because my overall approach is different from most people and I do things a little differently in some ways, but that does not affect my definition of trading versus investing.
Good luck in your investing pursuits.
In other words, right or wrong, I refuse to engage in a civil conversation to explain my position, because I can't explain it without sounding like an idiot.
Why Does This Matter?
People come here to learn. They want to become better investors and asking questions, while somewhat awkward to some people in modern day society, it the cornerstone of civilized behavior.
But, let's assume this fellow was a DGI, for a moment. Let me ask you a question. Is it "better" to buy a stock like Procter and Gamble (PG) with a 4% yield point or would it be better to buy it with a 2.5% yield point. Which would make the most logical sense?
At a 4% yield point, the stock would definitely be a value to a DGI because (PG) doesn't always trade at a price that would give you a 4% yield point. So, as a DGI, you begin that particular "race" with a head start over other (PG) investors who do not purchase shares with the 4% yield.
I like having a head start.
Now stick with me. A short time ago, (PG) stock reached a high point of $144 a share. The yield point at that price would represent an "overvalued situation" and if you sold your shares, you would have locked in a 100% gain in two years (from your 4% yield purchase that had the shares priced at $72 each).
So, you got two years of dividends and you got the profits from the capital appreciation in the stock, but you are a bad guy, because that makes you a trader.
So, let's make another assumption. You're a buy and hold guy. Today, (PG) shares closed at $129.53 a share, which is $14 and change below the high point of $144 a share, not long ago.
Now, (GNRC) is at an all time high of $351 a share. I not only own the stock, but I also have their product at my beach house and at my personal residence. While my neighbors have been sitting in the dark and going to bed with their close on and blankets piled up on their bed, I've been living like nothing is going on at all, outside with the storm and enjoying heat, hot water, refrigerated food, and all the trappings of electricity.
(PTON) has pulled back a bit from it's high of $167 a share and closed at $138.45 a share today. Should we have taken some profit at $167 Well, I think so.
But let me ask you a question.
If you're a growth investor, then how do you capture the "growth" in your stock purchase? If it sits in your portfolio, then you have a "paper gain" or a more technically correct "unrealized gain."
You can't "realize" the gain, unless you sell shares. It's possible with puts and calls, but the average person isn't doing that and technically if you're not, then you are having a paper gain and that's about the equivalent of having a blow up doll for companionship as opposed to a real human being.
You can define trader any way you want to. I don't have a problem with that. But when you call me a trader because I choose to buy low and sell high, then, to be honest with you, you are a "Wait. What" meme.
Don't be that guy. Think. I know it's a rare thing these days, but the alternative to thinking is getting pretty old.
Just keep on scrolling down the page. Be a good SA reader.