Thursday, August 4, 2011

Speculator vs Investor

"People who invest make money for themselves; people who speculate make money for their brokers.”

- Jason Zweig


An investor would carry out background research to:
1. Understand the company’s business.
2. Protect from losses by buying company stock when it’s undervalued.
3. Avoid succumbing to “herd mentality” by buying into hotly-tipped stocks.
The investor would do well, look forward to the assurance of adequate returns and safety principal.


Speculators are akin to gambling which carries high risk. And if you consider the matter carefully, would you want to put your hard-earned income to such an uncertain outcome?
Normally, what they buy:
1. A whispered “hot tip” that a particular stock will soon rise in value.
2. Without doing any research on the company, its past performance, or its dividend yield.
3. Media hype on the stock.

1 comment:

  1. I would like to comment about how can technical analysis account for the unexpected sudden death or illness of a guy like steve jobs. A sudden unexpected major lawsuit against a company. Even a unexpected earnings suprise on the downside..What about a takover offer for a company that nobody was expecting. I have nothing against technical analysis Although I remain skeptical about it but I do find it interesting to listen or read about it. I am at heart a fundalmentist when it comes to investing because I believe that invariably and in the end a companies stock price must at some point reflect the performance of the company. Their many stocks that have increased tremendously in value apple computer traded at just 5 dollars in 1998 today its around 400 dollars also petsmart stock traded at just 2 dollars in the year 2000 now its trading around 50 dollars a share theirs many other stocks but to many to list here. So you can still make lots of money buying and holding if you choose the right stocks