Saturday 24 October 2009

Trading vs Investing

Trading vs Investing

We love views of big-shots. Rakesh Jhunjhunwala, in the world of investing, carries a lot of clout in India.

A titbit excerpt from a recent interview with him that I happened to come across::

 

Source: ET NOW, if I'm not mistaken

Question: Everyone knows that you are both a successful long term investor as well as a trader, how do you manage to balance both?

Rakesh Jhunjhunwala: Short term trading is for short term gain. Long term trading is for long term capital formation. Trading is what gives you the capital to invest. My trading also helps my investing in the sense I use a lot of technical analysis for trading at times.

If the stock is overpriced, I should sell but my trading skills tell me that the stock can remain overvalued or get more overvalued. Hence, I hold on to my investments.

So, I think they complement each other in many ways but they are two distinct compartments totally.

 

Guess that we should learn from the great Guru and prosper!

Regards,

N


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