test4

Sunday, December 14, 2008

Investment, Speculation, Gambling

What are the differences between investments, speculations and gambling in the stock market?

In my opinion....

Investment:
"I buy into that stock because I believe in its fundamentals. The price is also oversold."
"The technical indicators showed that the price has consolidated, and will be on a upward trend soon."
"I based my purchase on the price to earnings ratio and intrinsic value of the stock."


Speculation:
"I invest in that stock because I think the price will go up. It's intuition."
"Everyone tells me it will go up."
"I have a hunch I will be able to earn within a short time."


Gambling:
"I'm betting that it will go up."
"I don't understand why I'm buying, but I will sell it as soon as it goes up to make a profit."
"I watch the price everyday, hoping it will go up and let me make a quick profit."


An investor knows why he's buying, when he/she made a mistake in purchasing, and learned from the mistakes. Strategies are followed, and rules are set. There's no feelings or emotion for any stock. The company/stock does well, and the investor take it that his/her judgement is correct. But if the company/stock goes bad, the investor will learn from the bad decision, tweak his/her strategies for the better, and use the new strategies for the next investment. Investors thus improve over time.

A speculator or gambler knows little or nuts about what he/she is buying. When a mistake is made, he/she will think: "damn, should have bought at this price, and I would have earned." There are many what-ifs scenarios. The company/stock does well, and the speculator/gambler will give himself/herself a pat on the back and congratulates himself/herself for being "smart". But if the company/stock goes bad, the speculator/gambler will start blaming people he/she believes in, believe that it was just a stroke of bad luck, thinks that it will recover soon. He/she does not have any strategies to tweak, and would most likely not learn any lessons. The cycle usually continues on and on for them.

2 comments:

  1. Hello Guys!! I am Belinda. I live in Chicago  USA. I am very excited today and do not know where to start my testimony from. I was a poor woman with 3 kids and find it difficult to pay my bills and feed my kids.My husband left me and the kids for another woman and ever since then we were living in pain and hunger but just few days ago i came across a testimony of a man who got a blank ATM card from Mr.Alexander so i immediately contacted him for the same type of ATM card and i am very happy to announce to the world that i am living a fulfilled life. This blank ATM card can withdraw up to 10,000 dollars and more daily without you having any account with any bank. I have been able to buy a house and start my own business with this blank ATM card. Are you poor and need help then contact him now. Mr.Alexander email address is alexanderhackers01@gmail.com

    ReplyDelete
  2. Hello Guys!! I am Belinda. I live in Chicago  USA. I am very excited today and do not know where to start my testimony from. I was a poor woman with 3 kids and find it difficult to pay my bills and feed my kids.My husband left me and the kids for another woman and ever since then we were living in pain and hunger but just few days ago i came across a testimony of a man who got a blank ATM card from Mr.Alexander so i immediately contacted him for the same type of ATM card and i am very happy to announce to the world that i am living a fulfilled life. This blank ATM card can withdraw up to 10,000 dollars and more daily without you having any account with any bank. I have been able to buy a house and start my own business with this blank ATM card. Are you poor and need help then contact him now. Mr.Alexander email address is alexanderhackers01@gmail.com

    ReplyDelete

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