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A traders market

If you listen to financial news you will often hear the statement that it is a traders market. This is not a precise statment. On this site we differenciate between:

  • Bull markets. That is markets that trend upwards most of the time.
  • Bear markets. That is markets that trend downwards most of the time.
  • Flat or traders markets.
Again there is ambiguity. What do we mean by a market, and which market do we think of? If you have hit this page and are still reading, we assume that you understand what we are talking about and no further explanation is required. Here you can download an This file is made for educational purposes, so we take no responsibility if you use it in your financial transactions, trading, investment etc.

Distinction between investment and speculation

Since this site has a siter site, you can read more about that subject there. If you wan't to dig even further into this subject, we can recommend "Security Analysis" by Benjamin Graham and David Dodd:

  • The Classic 1934 edition chapter IV page 50.
  • The Classic 1940 second edition chapter IV page 57.
That whole chapter has the same title as the heading of this story. Since there is nothing new under the sun, a side from bots or software that trade the market today, we recommend another classic book, "Reminiscences of a Stock Operator" by Edwin Lefèvre for the beginning or seasoned trader. Trading is spculation according to Graham and Dodd and we agree. Even if you think a stock is undervalued and you invest for the purpose of a price increase, it is speculation in our view. You buy the stock and bet on a price increase. If you use advanced technical analysis, software or mathematical models in your investment we can say the same. If you buy a share in a company to become an owner for the purpose of dividends, you are an investor according to our definition. That means that companies that have a historical tradition for paying out (good) dividends are god investment candidates.

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