Investment and speculation are two very different activities, but in the stock market, the thin line between the two is frequently crossed and seldom clearly defined. A lack of understanding the differences between these two processes usually leads to speculators calling themselves investors, which is a bad label.
Generally speaking, investors make an investment based on sound judgment and look to profit from a business’ cash flows for the long term. Speculators, on the other hand, are seeking to profit from short-term market movements and require a different temperament to long-term focused, business-orientated investors. Accidentally falling into either category can be a costly mistake. To help ensure you do not make this error, I have gathered together some quotes from great investors who try to outline the differences between investment and speculation. Continue Reading »