NIFTY support 5120?

I think expiry game started. If NIFTY is kept in the range 5100 and do expire at 5100 the put writers will gain.

I am not seeing much bullish traction. But need to wwtchout for bears.

Difference between trading and investing?

Many of my friends used to ask about the difference between investing and trading in stocks. My friends also used to ask about the differences between short term investment, long term investment.

I would like to try put together all those points here, which I am sure should give a fair idea about these topics.

To understand investment, first one should understand what is trading with respect to stocks. Particularly in the context of Indian stock markets such as NSE, BSE and MCX.

So, lets define trading.

Trading can be defined as the process of buying at one place and selling at another place, mostly for a profit. Well, the selling can be after few days also. Luckily stocks are not perishable goods (well, some stocks are...) like vegetables.

If you see any company involved in trading such as BigBazaar, SPAR and observe what they do - i.e buy at lower price and sell at higher price - you can identify one factor. That is nothing but hording.

So, these guys buy onion or tomato or sugar and store them in store rooms for a while, and when they see a profitable price to sell -  they will sell it. But the underlying factor is attempting to buy low, hold it with themselves for a while and then sell. This will be standard pattern.

They don't really care about quality of the product, so cheaper quality means lesser price on both buying or selling side. That's all they care.

Now we apply the same logic to stock markets, you can see the direct co-relation. So in trading, the traders buy cheap, sell at profit after holding for sometime.

Taking losses is part of trading.

Sometimes the shops also sell less than their buying price  to reduce their inventory. The same is applicable for stock traders.

One thing that I want to clarify is: Both so called short-term investment and long-term investment  (as popularized by media) are nothing but trading. The TV guys even tell short-term investment means holding period of 3 months. Long term investment means holding period of 5 years.

Sometimes the short-term investment time will change to 1 year, and some times the same 1 year is applicable for long term investment.

So, moral is - there is no concept the short term investment or long term investment as such.
It is just a perspective from individual view point. It is just plain trading.

Then what is Investment?

 To understand Investment in the context of India and Indian stocks in NSE, BSE -  I would like you to ask one question to yourself.

The question is:
How much time you spend before buying a property like house or land? or even a LED TV?

Normally most of us spend anywhere between 3 to 6 months for deciding on a property. Then ask this question:

How much time you spend before buying a stock?

If the answer is less than 3 months - most probably you are not investing.

Then ask this question:
What all research you do before buying a property, and what all research you do before buying a stock?

If you can co-relate  the questions, you will know what I mean by investing.