Daily Trading In The Stock Market Is Not Considered An Investment, But Rather Like Gambling In Las Vegas

Illustrators. (Adam Nowakowski / Unsplash)

JAKARTA - During the COVID-19 pandemic, investors in the capital market increased in number. New investors or newbies, on average, like to trade on a daily basis.

Trading is a term in the stock market, which is the activity of buying shares, to be resold in the not too distant future. Usually shares are sold immediately, at most months, for short-term gains.

In the United States, lockdown conditions due to the COVID-19 pandemic have forced gambling places such as casinos in Las Vegas to close. This was eventually used by investors to "run" to the capital market to compete to find money in trading on a daily basis.

Quoted from CNBC, Monday, December 14, many investment experts warn that day trading can end badly. In fact, the investor who is O'Shares ETF Chairman Kevin O'Leary, compares day trading to gambling.

"Day trading is not a form of investment. Day trading is gambling. There is nothing wrong with that. There is nothing wrong with Las Vegas either. But clearly it is not an investment," said O'Leary.

He further explained, the difference between trading or day trading with investing is that investment puts money into the market by looking at the long-term prospects for stocks.

O'Leary is also referring to Berkshire Hathaway CEO Warren Buffett's legendary buy-and-hold investment strategy.

"He's one of the most successful in history," he said.

According to Buffett, money is made by investing in good companies for a long period of time. Buffet said, if investors buy a good company, then profits will definitely be obtained 10, 20, 30 years from now.

"And that's how investors should do it. Buffett understands that in the long term, it's about cash flow and about investing, taking positions and holding them for long periods of time," said O'Leary.

Basically, O'Leary doesn't really have a problem with day trading. But he sticks to the principles held by Warren Buffett.

"For me, you can go to Las Vegas or you can trade during the day. Same thing. It's not an investment. It's gambling," explains O'Leary.