Can Mutual Fund Investments be Traded Like Shares?

Picture shows a person attempting to trade in mutual funds

Actual Question:

Is it a good option to invest in mutual funds for short periods, like share market trading?

Answer:

Dear Friend!

I will answer your question in two parts:

1. Trading in mutual funds (units of mutual funds)
2. Trading in general

Part1: Trading in Mutual Fund Units:

Mutual funds units are issued by specific funds. They can be purchased only from the fund and can be sol back only to the same fund. I cannot buy units either from any other person or entity.

Mutual funds are not listed on stock exchanges.

In order to bridge this serious gap, mutual funds have brought out special products called ‘Exchange Traded Funds (ETFs)’. ETF are listed on stock exchanges and can be traded just like shares.

Part2: Trading in general:

Trading in general is not investing but a dangerous speculative activity. Trading / Margin Trading has ruined many lives.

I strongly encourage you to become a value-investor, which is safe and sure path to investing success and and enduring riches over a long period of time.

Related Articles:

• Is There A Mathematical Formula for Option Trading?
• Is it a Good Idea to Learn Intraday Trading or Margin Trading?
• What Are Investments Actually?
• What is Short Selling?

Thank you,

With Best Regards

Anand

How Warren Buffett Trades in Stocks?

Picture shows a person engaged in trading in stocks

Actual Question:

How does Warren buffet analyse companies for trading?

Answer

Dear Friend

Thank you for an insightful question.

Your question has two distinct parts:

1.     How Warren Buffett, Chairman Berkshire Hathaway, analyses companies

2.     How does he employ the findings for trading.

The factual answer is that Warren Buffett does not indulge in trading in stocks and he analyses companies based on value-investing principles, propounded by Benjamin Graham in two books:

1.     The Intelligent Investor

2.     Securities Analysis

In a nutshell value-investing is about:

• Identifying wonderful companies that have strong and unshakable franchise like brand and product excellence - examples Gillette and Coca-Cola;
• Determining the intrinsic values of shares of such companies;
• Buying those stocks below their intrinsic value or maximum at par - ideally during unjustifiable market lows like the post Lehman Brothers collapse;
• Holding the investments intact for decades, reaping regular dividends and letting the original capital appreciate significantly;
• Maybe, sell those highly capital appreciated investments during unjustifiable market highs like during the period just before the Lehman Brothers collapse, investing the proceeds in regular income generating instruments like bonds, which again are bought at a discount, till the time again the markets turn unreasonably pessimistic.

Picture of the book "The Intelligent Investor" by Benjamin Graham

Coming back to the second part of your question, you might have already realised by now, from the above explanations, that Warren Buffett, Chairman Berkshire Hathaway,  does not indulge in trading - meaning intra-day or short-term trading - which is based purely on expectations of short-term price rises and slides. In fact day-trading and margin trading

Suggested further reading:

• How to Calculate the Intrinsic Value Shares?
• Intrinsic Value As Described by Benjamin Graham Video
• Margin of Safety
• Market Fluctuations Are Investor's Friend
• Day Trading Definition
• Margin Trading Definition

Thank you,

With best regards,

Anand

Can I Invest with a Six Days a Week Job?

Value investor nurturing plant of investment

Actual Question:

Is it possible to invest in stock market through Zerodha if I have 6 days a week job?

Answer:

Dear Friend!

To me it appears that you want to know whether it is possible to make regular investments having six days a week job.

The answer is a definite yes.

Provided we have a clear understanding of the meaning of the word investing.

Day-trading/ intra-day trading/ margin trading is not investing. In case your query is related to trading in stocks, I say that it is extremely difficult to handle with six days a week job. I go one step further and caution you not to ever indulge in trading either in stocks, commodities or currencies. It is highly risky, dangerous and speculative activity.

Day trader transacting on electronic platform

In case you are referring to investing in the real sense, that is with an intention of buying securities to take delivery, holding them for a very, very long time, it is very much possible. I do it. Thousands of value investors do it allover the world. You can even place after market orders in the night or early morning, which will get automatically executed during, market hours.

Thank you,

With Best Regards

Anand

Related Topics:

• Is the Stock Market a Place to Make a Fast Buck?
• Is There A Mathematical Formula for Option Trading?
• Is it a Good Idea to Learn Intraday Trading or Margin Trading?
• Margin Trading Definition
• Can We Achieve Warren Buffett Like Success?
• What Are Investments Actually?