Investing Essentials

Investing and trading are different games with different time horizons.

• Investing seeks to own good businesses for years, letting earnings growth and compounding build wealth. Decisions rest on fundamentals. • Trading seeks to profit from shorter-term price moves — days to weeks — relying more on technicals and timing.

Neither is "better"; they suit different goals, temperaments, and amounts of time. Many people invest for the long term and trade only a small, separate portion of capital. Confusing the two — trading a long-term holding, or "investing" in a failed trade — is a common and costly mistake.