Why is Long Term Investment Better and More Profitable

Usually people either trade in stock market where they buy the stocks in order to sell them in next few days or weeks and few others invest in stock market where they hold stocks for long term. Investing in stock market is generally risk free unless there are any depressions, where as trading is nothing but speculation or gambling.
We all know that the stock price usually retraces the growth in the company's earnings. For example if the earnings of company 'X' increases by 20% this year then the stock price is expected to rise by 20% over a period of a year. For a stock to grow at 20% each day the price should go up or compound by 0.050%. Which never will happen in stock market. Every day the prices move up by 2-3% on an average or go down 2-3% on an average and finally at the end of the year one can find them trading at a price much higher to the price compared to last year because the stock would have retraced the growth in earning to maintained a fairly valued P/E as well as a PEG Ratio.
Therefore when people bet on long term they very rarely lose money in stock market until and unless then put their money into a price competitive business or in businesses with bad fundamentals, but where in if one trades no matter whether the company is good or bad the trader is no better than a gambler as the course of the stock price of the company will be unknown in the short term.

Here are few example how do stock prices retrace the growth in earnings.

 

2011	2012	2013	2014	TTM
12.88	16.86	21.4	26.41	31.59

Total (%) 245.263%

Earnings Per Share

2011	2012	2013	2014	2015
32.41	40.19	45.34	58.26	69.49

Total (%) 214.409%

The stock market in spite of a 65%+ crash in 2008-09 has managed to compound at a rate of 14.9% over a period of 10years which is much higher than all other asset classes.