Value Investing vs Value Trading?

[Salty]

Hi Vbuddies!

Lets discuss.

1) Are there significant difference between the two?
2) Which one do you think you are currently doing?
3) Which do you prefer, and why?

My thoughts.

I think value investing seems Buffett and value trading seems Graham style.
One fully understand the business and the other purely valuations.
I am definitely value trading and would prefer value investing, however as i can only access listed companies, comparison of companies information are not perfect.

Would like to hear your thoughts!

[LionFlyer]

How do you define value trading? Trading also implies a short time horizon.

[egghead]

For me, as long as you choose a cat that can catch mouse for you, it does not matter whether you call the cat "Garfield" or "Tom".

[yeokiwi]

Graham was a trader....
Not sure whether Graham will turn in his grave....haha..

If you google "father of value investing", the overwhelming or the only answer is.....

[freedom]

does value investment have to be long term in nature?

What if all of sudden, market recognizes the full potential of an undervalued company and makes it overvalued? Will you not sell because of concern of short term?

It does not make any sense that value investment implies long term.

to me value investment only means that I am investing into something undervalued by market, the investment timeframe has nothing to do with whether undervalued or not.

[egghead]

does value investment have to be long term in nature?

What if all of sudden, market recognizes the full potential of an undervalued company and makes it overvalued? Will you not sell because of concern of short term?

It does not make any sense that value investment implies long term.

to me value investment only means that I am investing into something undervalued by market, the investment timeframe has nothing to do with whether undervalued or not.

I agree. It can also be that as investor, we found new information that shows our valuation was too optimistic, etc. I find that for me as a man in the street, we buy sell because we made mistakes more frequently than experts like Buffet, Graham do.

[Salty]

Haha i didnt mean to turn Mr Graham in the grave by saying he is a trader.

When i mean value trading, it means buying and then selling it away when it realised value. Not the typical 'stock contra'.
Its more like buying and selling value, do you buy and sell value or you invest in the value?

I came to this discussion from the book The Value Investors, where Mr Teng Ngiak Lian mentioned if you do not do indepth comparison on business and see who owns the 'sweet spot' we are just value trading and not value investing.
Something along the lines...............

and yes, i agree with Mr freedom idea.

[CityFarmer]

IMO, value investment is a mindset, a concept or a noun. It is not a verb which defines action

Peter Lynch is a guru for value investment, but he trading more frequently than most of the buddies here.

Warrent Buffett's investments are mostly long term, but he did buy-and-sell too. The examples were arbitrages and the more recent Intel investment.

In short, I agreed with freedom that value investment doesn't necessary mean long term.

[specuvestor]

Value Trading is pretty ugly... Both are oxymorons

I think you may be referring to RELATIVE value strategies which can be trading oriented. The terminology may be misleading as it allows you to buy expensive stocks as long as you can short MORE expensive stocks

[brattzz]

Err...confusing to me..

maybe i'll just stick to "Buy Low, Sell High"!