"Just like every fool day trader, I thought I was a corporate raider."
NEW YORK (
TheStreet) -- The above is a line from
But it's also the song of a new kind of small "investor," one who focuses on stocks' daily movements and may read this site.
They're gamblers. We're gamblers.I have a number of things in my retirement portfolio, and I disclose each holding whenever I write. But the best-performing thing I have is an index fund tied to the Standard & Poor's 500 index. Since 2009 it's up over 20%; while some of my individual stocks have done better than that, the average isn't that good. I make this admission freely because I've never pretended to be anything other than a financial journalist. I am not a financial analyst, I write financial articles. I suspect my performance is fairly typical. The lesson is that when you chase momentum you usually get burned, and there's always momentum in stocks. That's the "action," and you can play it up or down. If you've been short Apple (AAPL - Get Report) the last three months, you're in clover. If you were short Netflix (NFLX - Get Report) a year ago, you were making big money, too. Well, maybe you weren't "making" money. You were "winning" it. But the cash of some lottery winner spends as well as Tim Cook's paycheck. The question is, has Apple's business really changed in that year? It is, even today, trading for 8% more than it was back then. Had you bought into Netflix back in October 2011, when it was at its speculative high, you're still down 29% even with its latest pop. I'm not saying don't play the market and don't read the financial press. I'm saying you should understand the difference between gambling and investing. I invest in Apple because I believe that, five years from now, the business will grow and it will be worth more than it is today. If I put in money with a shorter time horizon, a few months or even just one year, I'm gambling.
Check Out Our Best Services for Investors
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Model portfolio
- Stocks trading below $10
- Intraday trade alerts