Long term investing or short term investing? This question is the number one consideration for most investors when deciding an investment strategy. The following article describes both strategies and outlines the good, the bad, and the downright ugly sides of long term and short term investing. Many novice investors want to know more about the pros and cons of long term investing versus short term investing. Long term investing is a traditional investment strategy that is also known as "buy and hold". Short term investing is more speculative and can include short selling securities and day trading. Historically, most investment advisors will agree that long term investing is a far better strategy because it reduces exposure to risk. Investors who participate in a long-term investment strategy must be patient because their returns will be more gradual than short term investing. Short term investing strategies can be very lucrative, but carry the most risk. In the dot-com bubble of the late 1990s, many people began to participate in a short term investing strategy called "day trading". Day traders would buy and sell securities in a day, capitalizing on the often wild fluctuations in share price as a result of a vibrant stock market. This type of short term investing strategy made some people incredibly wealthy, while the majority of people participating lost an unprecedented amount of money. In contrast to short term investing, long term investing allows an investor to reduce their exposure to market volatility by spreading the exposure out over time. Many savvy investors have profited greatly from long term investing strategies as a result of patience and prudent investment choices. Inevitably, when discussing long term investing, the name Warren Buffett will be mentioned. Warren Buffet's long term investing strategies have made his company, Berkshire Hathaway, into one of the most profitable companies in the world. The shareholders in Berkshire Hathaway pay thousands of dollars per share to invest in one of the most lucrative long term investing strategies in the history of the open market. When deciding upon an investment strategy that is right for you, whether it is a long term investing strategy or a short term investing strategy, ultimately you have to evaluate your comfort with risk exposure. Spreading risk out over time in a long term investing strategy is the safest method of investing capital, but often the profit potential that can be realized from a short term investing strategy is difficult to ignore.
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