Investing vs Speculating
True value investing is a journey, fueled by strategic and calculated decision-making. On the other hand, speculating is a reckless gamble, a short-sighted pursuit of quick profits. Don't be fooled by Wall Street's rhetoric - the difference between investing and speculating is vast and significant. Choose wisely, and let your intelligent decisions guide you towards a brighter financial future.
Below are some excellent definitions of a Speculator and an Investor taken from Ben Graham and John Maynard Keynes.
“If you are a speculator, your decision to buy or sell is based on what you believe about the near-term direction of price.” - Ben Graham
“…speculation is the activity of forecasting the psychology of the market.” - John Maynard Keynes
“If you are an investor, your decision to buy and sell is based on the underlying economics of the stock you own.” - Ben Graham
“Investing is an activity of forecasting the yield on assets over the life of the asset…” - John Maynard Keynes
Now - think about what kind of activity you are encouraged to engage in when you watch your financial news network of choice (especially the commercials) or read most research reports. Even worse, think about what most trading platforms' advertisements suggest ~ "in your spare time, you are able to outperform professional investors, most of whom spend millions of dollars and work 60 hours a week on nothing but analyzing stocks."
Of course, they want you to speculate...because they make money whether you buy or sell.
We’ll say it again, “THEY MAKE MONEY BECAUSE YOU BUY AND SELL. They want volume and are happy if you buy today and sell tomorrow - again and again.
Repeat this “Volume generates commissions”. Commissions cost you and lower investment returns.
Don't be a speculator, you can be more, not just a better investor but an Intelligent Value Investor.