Shareholder mindset
I don't consider myself a part- owner when I invest. I consider trading as just having a piece of paper saying that I own part of a company. To me, I buy shares so that I can make profits. I don't buy many shares and don't set to change the company or stick with it through thick and thin. I don't have any emotional attachment to a stock. I DYODD first, checking that the company has good profit or outlook, before I trade/ invest using TA.
A shareholder's mindset is to buy for the long term and he usually has some emotional attachment to a stock. When emotions are involved in investment, irrational decisions and mistakes are made. The only emotion I may have is greed when I set my selling price at too high a resistance level. The article below explains the emotions in greater detail.
I do trading for the short and medium term, unlike a shareholder who invests for the long term. I do swing trading using TA, holding the stock for days or weeks. Below is the result of my $Medtecs Intl(546.SG$ trade.
A shareholder believes that a stock or company is always profitable in the long term. He may trade the same stock as in Fig. 2 below.
$Medtecs Intl(546.SG$ manufactures gloves and personal protection equipment (PPE). Its shares starting rising in Mar 2020 in the wake of the Covid-19 pandemic. It then surged and peaked in Aug 2020. A shareholder bought the shares at SGD0.70 because the intrinsic value was SGD2.00. After the peak, the shares started to plunge. Companies stocked up on as much as the equipment as they could. Some Chinese companies entered the industry and the companies cut ASPs to compete. They also built many plants. These resulted in overstock, oversupply, falling ASPs, falling profits and even losses.
A trader would trade the swings, making profits. But the shareholder is making a loss and still holding his shares as he believes the company will be profitable in the long run. He is going to wait a long time as the company may only be profitable next year and maybe a few more years for the price to rise to SGD0.80.
Lets look at a few more examples. In Fig. 4, the trader bought $SIA(C6L.SG$ shares and traded the swings profitably several times. The shareholder bought at SGD5.20 in Mar 2020 and sold at SGD6.02 in Jan 2023 for a small profit.
Fig. 5. shows the $Apple(AAPL.US$ shares between 2018 and 2023. If you bought the shares in 2020, you would have given up your gains in 2022.
Fig. 6 shows $Tesla(TSLA.US$ shares between 2018 and 2023. If you bought the shares in 2020, you would have given up your gains in 2022.
Fig. 7 shows $IFAST(AIY.SG$ shares between 2018 and 2023. If you bought the shares in 2020, you would have given up your gains in 2022.
So the trader makes more profit trading swings than the shareholder investing long term. A stock doesn't move up or down in a straight line. It always moves from over-optimism to over-pessimism and vice versa. The higher the climb, the harder the fall. The more volatile a security is, the more a shareholder shouldn't invest for the long term. Hence, I don't have a shareholder's mindset. More details in the article below:
$Dow Jones Industrial Average(.DJI.US$ $Nasdaq Composite Index(.IXIC.US$ $S&P 500 Index(.SPX.US$ $Ethereum(ETH.CC$ $Invesco QQQ Trust(QQQ.US$ $CSI 300 Index(000300.SH$ $Hang Seng Index(800000.HK$ $TENCENT(00700.HK$ $Tencent(TCEHY.US$ $Alibaba(BABA.US$ $BABA-SW(09988.HK$ $Bilibili(BILI.US$ $PDD Holdings(PDD.US$ $BYD COMPANY(01211.HK$ $BYD Co.(BYDDF.US$ $Baidu(BIDU.US$ $BIDU-SW(09888.HK$ $JD.com(JD.US$ $MEITUAN-W(03690.HK$ $Occidental Petroleum(OXY.US$ $Imperial Petroleum(IMPP.US$ $Chevron(CVX.US$ $Hewlett Packard Enterprise(HPE.US$ $Intel(INTC.US$ $NVIDIA(NVDA.US$ $Advanced Micro Devices(AMD.US$ $Meta Platforms(META.US$ $Alphabet-C(GOOG.US$ $Alphabet-A(GOOGL.US$ $Microsoft(MSFT.US$ $Ford Motor(F.US$ $AEM SGD(AWX.SG$ $Rex Intl(5WH.SG$ $RH PetroGas(T13.SG$ $Geo Energy Res(RE4.SG$ $Golden Energy(AUE.SG$ $Top Glove(BVA.SG$ $Riverstone(AP4.SG$ $Aspen(1F3.SG$ $UGHealthcare(8K7.SG$ $Acesian Partners(5FW.SG$ $Parkson Retail - watch list(O9E.SG$
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Invest With Cici : Thanks for sharing, I guess a large percentage of “shareholders” become passive “shareholders” because they can't judge the timing of buying and selling. Need to keep learning the skills of timing.
bullrider_21OP Invest With Cici: You're welcome. Timing can be improved by improving your TA skill. I don't consider myself a shareholder, just a trader.