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The Difference Between (Re)investing and Trading
Understanding the difference between (re)investing and trading is crucial. When it comes to buying real estate at a discount, it is more beneficial to create a business around capturing that discount repeatedly, rather than holding onto the property for a long time. The focus is on throughput and maximizing transactions. Holding onto a discounted property for a long period dilutes the edge gained from the initial discount. Similarly, in investing in businesses, it is important to consider the ability of the business to reinvest its capital at attractive rates of return in the long run. A stock may appear cheap today, but if it cannot reinvest at attractive rates in the future, it may not be a good investment.