Investible vs Tradeable: The Best Stocks to Hold, not to Trade

There are thousands of stocks you can trade in every day. If you are primarily in the United States, you have access to more than 4,000 publicly-traded firms. You can also trade or invest in thousands of over-the-counter (OTC) stocks.

Similarly, if you have an international trading platform like Day Trade the World (DTTW), you can trade in tens of thousands of firms.

While you can trade in any public stock, the reality is that some companies simply don’t make good trading options. Let us look at some of these firms.

Berkshire Hathaway

Berkshire Hathaway is one of America’s biggest conglomerates. It is run and managed by Warren Buffett, who is widely-known as the world’s best investor. The class A shares of his company trade at $347,400 while class B trade at $235.

Most importantly, Berkshire’s stock has gained by more than 1,012% since 1996, making it a top-performer.

However, in reality, trading Berkshire Hathaway’ stock is not ideal because of its low volatility. Also, for most people, trading the company’s class A stock is out of reach because of how expensive it is.

Therefore, if you want to make money on Buffett, the best approach is to just invest in the stock.

Berkshire Hathaway Chart from Tradingview

Apple

Apple is the biggest company in the world in form of market capitalisation. It is also one of the most profitable and most recognizable brands. The stock, which is trading at $115, has climbed by more than 55% in 2020. It has also gained by more than 300% since 2015.

While Apple is a good company, we don’t think it makes a good stock to trade because of its low volatility. As you can see in the five-year chart below, the stock has been in an overall upward trend, with only a few pullbacks. For a trader, that means making less amount of money.

In the long-term, however, Apple is a good investment because of its strong global presence, its strong balance sheet, its stable dividend, and the scale of its domination.

Apple stock since 2016. Chart from Tradingview

Amazon

Valued at more than $1.6 trillion, Amazon is the third-biggest company in the world. The firm’s primary product is its e-commerce portal that allows people to buy almost anything. It also has more than 100 million subscribers of its Amazon Prime service that costs about $100 per year.

Still, its fastest-growing business is AWS, which provides cloud computing products to companies.

The firm has been a key beneficiary of the pandemic because of the shift to e-commerce and cloud computing. Its strong performance and the scale of its business makes it a good long-term investment.

Why Amazon is not good for day trading?

However, there are two main reasons why Amazon is not a good company to trade in. First, its stock trades at $3,195, which makes it a bit expensive for most traders. Second, Amazon’s shares lack the volatility that is required for day traders.

Amazon stock since 2016. Chart from Tradingview

Now that we have looked at three well-known companies you should not trade in, let us look at one that you should consider trading in. This is just an example but it includes the qualities of all tradable companies.

Blue Apron

Started a few years ago, the company revolutionised an industry that many people didn’t think needed to be disrupted. When the company IPOed, its stock sored to more than $150. However, today, it has declined to $7.

As such, Blue Apron is a good investment because of three main reasons. First, it is mostly owned by retail investors, who tends to be more active. Second, at $7, anyone can trade the stock profitably. Third, Blue Apron tends to be more volatile than other large-cap stocks.

Blue Apron stock in 2020. Chart from Tradingview

Final thoughts

Mega-cap stocks like Microsoft and Apple are usually good companies to own for the long-term. However, because of their expensive share prices and low volatility, they tend to be miserable companies to trade in.

Ideally, we suggest that you focus on small and medium-cap stocks as a day trader.

External useful Resources

Leave a comment



Live Trading with PPro8™ on YouTube

DTTW is proud to be the lead sponsor of TraderTV.LIVE, the fastest-growing day trading channel on YouTube. With over 100k subscribers in less than 6 months, TraderTV.LIVE features a daily live trading broadcast, professional education and an active community.

Accepted Payment Methods:

Your ability to open a DTTW trading office or join one of our trading offices is subject to the laws and regulations in force in your jurisdiction. Due to current legal and regulatory requirements, United States citizens or residents are kindly asked to leave this website.

© 2011-2020 Day Trade The World™ All rights reserved.

Day Trade the World™ is a registered trademark of Select Vantage Canada Inc. 

Privacy PolicySitemapFraud Alert.