Investor OR Speculator; Which one are you…?
I was reading an article about Investing versus Speculating and I could not help but thing to myself
“Self, are these not one and the same?”
The act of investing is defined as the purchase of goods (stock in our situation) that are not consumed today but will be sold at a higher price at some point in the future
The idea is that the asset will provide an income or will be sold at a higher price at some point in the future
Speculation on the other hand is defined as taking advantage of fluctuations in market movements and is typically high risk
Surely the active of investing is speculation in itself and anyone who doesnt know how to remove risk in their trading shouldnt be trading
I simply cant see a difference
You invest in a plot of land hoping to see the value increase – a fluctuation in market prices, no? aka speculation
I also do not believe there is such a thing as high risk these days. Yes there are certainly high risk products or investment ideas (there’s that word again)
Combining different products to hedge or cap risk is widely available with the plethora of products available makes high risk irrelevant – there is only stupidity or ignorance when it comes to risk
Perhaps it is time to define a new generation of activity which Ive been calling “Active Investing” and start taking the stigma away from speculation as being high risk
That is all
Still need a little more help?