Aug 25

Are there any safe investments today? 5

Individual Equities – Going Short

Short term investing is a completely different type of investing than long term investing. All of the qualities a long term investor looks for in a company and its shares may be nothing a short term investor is interested in. Similarly, qualities a short term investor is eying may not be important or even counter to what the long term investor is seeking.

A short term investor does not necessarily need a ‘sustainable’ business model. A short term investor is not interested in dividends, unless they are in the 20 to 30% range, which doesn’t exist. A short term investor does need to follow the news and filings as does the long term investor, but what a “sell” signal is to the short term investor may be completely different from that of the long term investor.

A volatile market with a clear battle between bulls and bears, which is what we have today, is an excellent environment for short-term trading. You can bet a stock swings up or down, and win in either direction. As corporate earnings continue to sag, and dividends further slashed, we see increasing risk to long term share holders ‘breaking even’ with dividends alone, meaning 75 years may not be long enough. Share price will factor significantly in the overall determination of net income – far outstripping dividend yields in importance.

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