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Trading Vs Investing - Party at the Moontower

moontowermeta.com · 1,592 words · saved by 1 readers

Trading is a business. Like a casino. You spread the risk over a bunch of tables and let the law of averages1 do its magic. Investing, whether it’s a as shareholder, LP, or creditor (ie allocating capital in the primary or secondary markets, but not as a member of management) is something you do in a business. You can invest in a casino. You can invest in a bank. You can invest in a trading business. The point is that investing and trading are actually different. The distinction seems subtle because the language and mechanics of investing and trading overlap. Traders talk about diversifying as much as investors do. Restaurant owners don’t. Traders and investors both talk about position sizing. Software founders don’t. This makes it easy to confuse trading for investing but the former is a business, not an investment strategy. You would not compare Optiver, Jane Street, or SIG’s returns to a portfolio manager’s. Trading firms think in unit economics just like any business (“how many fra

editor Newsletter Thoughts , The Money Angle 24 Sep 2022 9 Jan 2024 6 Minutes Trading is a business. Like a casino. You spread the risk over a bunch of tables and let the law of averages 1 do its magic. Investing, whether it’s a as shareholder, LP, or creditor (ie allocating capital in the primary or secondary markets, but not as a member of management) is something you do in a business . You can invest in a casino. You can invest in a bank. You can invest in a trading business. The point is that investing and trading are actually different. The distinction seems subtle because the langu

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