Warren Buffett is a renowned investor and one of the world’s richest man, and his opinion on investing is highly respected and heeded.
Buffett & Day Trading
He has famously said that “Day trading is speculation, not investing.” This is because day traders buy and sell stocks in the hopes of making a quick profit, rather than investing for the long term with the goal of earning a return on their investment.
Does Buffett engage in Day Trading?
Buffett himself does not engage in day trading, and he has warned others against it as well. In his 2017 letter to shareholders, he wrote that “the odds are against the average investor who engages in day trading,” as they are typically up against professional traders with more experience and knowledge. He also noted that the commissions and fees associated with day trading can quickly eat away at any profits made.
Reasons why Buffett does not believe in Day Trading
This has been a look at Warren Buffet’s opinion on day trading. He does not believe in it himself, and he has even joked that “if a monkey could do it, I would fire the monkey.” There are a few reasons why Buffet is so negative on day trading.
- First, day traders typically rely on short-term price fluctuations to make money. This means that they have to be very good at predicting the market, and they also have to be able to execute trades quickly. Both of these things are difficult to do, and many traders end up losing money.
- Second, day trading can be very stressful. The markets can be very volatile, and prices can change rapidly. This can lead to a lot of stress and anxiety for traders.
- Finally, day trading can be very expensive. Trading commissions can add up quickly, and it’s easy to lose money if you’re not careful.
Overall, Buffett believes that day trading is a risky and speculative venture, and that it is not a wise investment strategy for the average person. He instead recommends investing for the long term in companies that you believe in, and patiently waiting for your returns. This approach is much more likely to lead to success over the long run than trying to make money through day trading.
So if you’re looking to invest your money, it’s best to heed Warren Buffett’s advice and avoid day trading. Overall, Warren Buffet believes that day trading is too risky and stressful, and that it’s not worth the expense. He prefers to invest in longer-term opportunities where he can take a more measured approach.
There are certainly no guarantees when it comes to stock market investments, but investing for the long term is a much more conservative approach that has a higher chance of success.