Which is better: Short-term Trading or Long-term Investing?

I have just started reading about investing a few days ago so I still have a long way to go. Currently, I’m reading Ben Graham’s "Intelligent Investor" and from what I’ve read so far, he’s adverse to speculative trading/day trading and he advocates long-term investing and looking at the value of a company rather than merely looking how its price fluctuates in the market. He cites many examples of speculative traders who incurred big losses in the long-run.

But then, I’ve been following this forum where a professional day trader talks about long-term investment being merely a propaganda. He is saying, to the best of my understanding, that we should take advantage of the volatility of the market and never ever buy-and-hold. And he seems to be very knowledgeable in this area and he’s making big profits out of it. I’ve also read a couple of articles saying that buy-and-hold is a myth and we should always do something about the market trends. But these are the very things that Graham warned the non-professional investor about.

Now, I don’t know what to believe. I don’t know if I will have the answers after finishing Graham’s book. :[

Why don’t you try doing both? Do stock trading, but if the trade turns to the red side, become investor until the trade ends on the green.

You can do either one but you have to find your investment style. Even stock trading depends a lot on short of mid term investment and requires fundamental analysis of a company before putting your money in. Right now the market is so low, that no matter which successful company you put your money in, you will make a profit. May be negative daily fluctuations might slow down your progress on daily trading, but if you stay firm on your goals and don’t let emotions take over your actions, you will succeed.

If you want to do stock trading, I recommend you do a lot of reading about investor styles. It’s easier to pick successful stocks by picking stocks that big investors use. You will also need to learn about doing technical analysis if you want to learn when to enter or exit the market. Consider buying a subscription for stock technical analysis. They usually give tips as well. Learn about support, resistance and risk on stocks. Big investors do thorough analysis of companies that any small investor will not be able to match. They have teams analyzing companies and investigating them. Interviewing with managers, before making a decision to invest money on those companies. Stocks are not lottery tickets, they are a part ownership of a company.

Even the majority of those big investors, do stock trading. They may not trade stocks daily, but they might do it monthly or quarterly. The only investor that buys and holds is Warren Buffett.

One more thing, never leave a trade on the negative. If you have done all your fundamental and technical analysis correctly… that is, you are investing on a company that is undervalued, you are buying near support, and still the stock falls, it means that an unusual thing is happening. The stock will rebound to its real value eventually… You have to learn to be patient and let the market discover the gem you have on your hands. Warren Buffett says, that if you can’t tolerate to see an investment drop 50% below its value, then you have no business on investing. So, those people advising to cut losses on investments are either gambling money or they just don’t know anything about investing.

Good Luck and try trading on your style, not Graham’s.