In A Roller Coaster, the starting point and ending point is the same.

In Aircraft, your starting point is a different city / country than your destination at end of the journey.

 

In A Roller Coaster, your purpose is to have fun in the ups and downs. You don’t aim to reach anywhere other than from where you started.

In an Aircraft, you are not too bothered about the journey. All that matters to you is to reach your destination (preferably in stipulated time).

 

If you sleep in a roller coaster, you miss the fun as the purpose is to enjoy the ups and downs.

In an aircraft, you can sleep, watch movies, listen to music, talk to your co-passenger. In short, do anything other than worrying about the ups and downs of the journey.

 

Now, lets look at this analogy vis-à-vis intraday trading and long term investing.

Intra-day trading is like a roller coaster ride. People don’t really reach anywhere but do it for a kick. They just keep watching the markets and get thrilled about the ups and downs.

 

Long term investing is like boarding an Aircraft. Someone will board an aircraft because he wants to reach a destination. For him, the ups and downs in the journey are immaterial as long as he reaches his destination. So he will start an investment and then not keep worrying about it. As long as a trained pilot (investment manager) is taking care of his flight (investments), he doesn’t bother about the ups and downs.

(Imagine a hyper passenger who keeps disturbing the pilot about how to drive or about the coming obstacles!! It may result in an unwarranted crash )

Its now upto us to decide. Whether we want to reach a destination (retirement) , or we want to ride for fun. Our investment choice and investment behaviour will depend on this decision.

We look forward to your valuable comments and feedback.

The Author Prof. Saurabh Bajaj (BE, MBA, FRM, CFGP) is CEO with Nidhi Investments, Mumbai. He may be contacted on saurabh@nidhiinvestments.com if you have any questions.

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(The views mentioned in the article are personal opinion of the author)

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9 Comments

  1. perfect bhaiya!!! reading this article reminds me of the day when u said ki intra-day trading is just for kick’s n its more or less playing with your money whereas invest in long term and let your money be in auto pilot mode…

  2. I hear many people say intra day equity trading is a zero sum game. I.e someone has to lose for someone to gain. Options and futures are a zero sum game but intra day equity is not a zero sum game. Intra day and delivery of stocks are trading in the same day isn’t it ? I mean can a person take delivery of stocks sold by an intra day trader and vice versa ? Yes isna;t it. SO suppose an intra day trader buys 1000 stocks of XYZ company for Rs 1500 from a delivery trader who has bought the shares say 1 month back for Rs 1450, now intra day trader sells the 1500 to 1550 to a delivery buyer who in turn will sell the stocks at 1600 after 2 months. Both of them gained here isn;t it ? Am I right or wrong ?

    1. Your query is good and interesting. However, please understand that the price difference in which the trader operates are very very thin. So taking your example, he might be buying at 1500 and might get a chance to sell at 1507 to 1515 (they usually book profits / loss within a range of 0.5-1% movement).

      Now, for a gain of Rs. 7-15 he is taking an equal downside risk everyday. So this is like a flipping a coin. 50% chances of head and 50% chances of tail. So somedays, he will get +15, other days he will have -15. Net-net, he wont have anything. If at all he manages to pocket some money, the brokerage charges will eat away that as well.

      And even after that, if he manages to earn some small money, will it be worth his time ? A young knowledgeable person, who can use his knowledge for doing something more productive, and earn much better, is wasting his / her time on intra-day trading for some meager profits ?

      Wont it be better that he / she does something more productive and suiting his/ her skills and “invests” for a long term to build a fortune ?

      Purely my personal thoughts. You may or may not agree.

      Regards
      Prof. Saurabh Bajaj

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