Wednesday, May 21, 2014

Oxymoronic: Investing in a Secondary Market

If you aren't giving your money directly to the company, you are not investing, you are trading.

In secondary markets, such as the US stock market, you are buying shares from another owner, not from the company.  The money goes to the seller, not the company.  You are not investing.  The company does not benefit, except in an indirect manner (lowering their weighted average cost of capital if they choose to sell more stock to actual investors in the future).

If you think you are an investor because you hold your trades for a long time, you are just a long-term trader.