lkboyinuk wrote:in my point of view i prefer short term investment on share market as we can predict a near future than a longer time period ,so the thing i cant still understand is why the people who introduce them as experts say go to long term investments and avoid short term investments ?
I am not an expert. It depend on your choice. If one wishes to go with short term it is not a crime if you know what yo uare doing.
But just remember medium and long term investors are needed to sustain the market. Think what will happen if EPF , SLIC and peoplle like Mr Captain, D Perera all started trading in the market. What will happen to retailers.
Let me give you another example.
Say X share can be valued at RS 150. You buy at Rs 100. Within a day it goes up 10% and are happy with short term gain. You sell. And pay CSe fees. Then after some time it starts going up again . But you have moved to another counter on short term and have no time or money to react. Someimes If an investor does not study a full valuation of a share and does not hold as investment he/she can miss the chance for higher gain
EX: THis is a true situation.
BFL went from Rs 220 to Rs 290 in 3 days. Some thinking short term dumped them at Rs 290,280 thinking they can buy lower again after few days. Well after a couple of days all of a sudden with a few minutes it pick up from Rs 270 and went over Rs 290 . Within a few day it went to Rs 500 . Many short term traders could not react with a ferw minutes as they were not expectign this to pick up so soon and possibly had to buy at higher prices than they sold if they wanted to. If they held longer the full benefit would have got and this missed chance will not be there.
When you buy an undervalued and funadamental share it can have higher value in the medium to longer term than shorter term.
Anyway, I believe a good retail investor needs to have short term, medium term and long term in the portfolio.Another point,
Unless we have time, we cannot keep monitoring share market all the time. Say you have 15 shares in your portfolio. No one can watch all 15 at the same time. So if you have soem medium term, long term share you leave them aside with peace of mind.
When you put an FD you forget about it as you know it is secure and a guaranteed return and year after year you can compound intest if needed. Long term investments are like that. If you buy a fundamental and strong share you know that it will keep growing . So you can buy it and forget it without worrying about short term fluctuations as you know it will pick upo again. If you buy bad sahre short term there is a possibility it might never recover ( I am not saying it won;t)
Some time Shor term trader who buy high can automatically become medium term traders as selling low will be not wise.
These are my views only as I also believe in Investing. Some short term trader who are highly skilled may be able to avoid the issues as above. But not everybody will be sucessful.
Hope my view will give different light.
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