Investing Versus Speculation

by Darren

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Investing and speculation are two distinct disciplines, that are sometimes used interchangeably by the uninitiated. The terms describe two very distinct acts, and should be kept separate in our minds for that reason alone.

Speculation is most often done for the sole interest of guessing at price fluctuations. The speculator rarely cares about the underlying investment, but is rather most concerned with whether the price will go up or down. Speculators are almost always chartists, looking for a quick hit on their short term plays.

Investors are looking for returns on their investment dollars. They are not usually only concerned with short term price fluctuations, although some might be.

Investors tend to want to understand the financial property they’re investing in, and usually have a longer time horizon in mind than a speculator.

Speculators can be investors, and vice versa, but generally the disciplines tend to be exclusive, because they involved a distinct mindset.

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