Benjamin Graham Quotes (Author of The Intelligent Investor)
Toro Investment Education
In financial jargon, the terms investment and speculation are overlapping and used synonymously. In investment , the time horizon is relatively longer, generally spanning at least one year while in speculation , the term may extend up to a half year only. As per Benjamin Graham , an American economist, and professional investor, investment is an activity, which upon complete analysis assures the safety of the amount invested and adequate return. Conversely, speculation is an activity which does not satisfy these requirements. The basic distinguishing point amidst these two is that income in the investment is consistent, but in the case of speculation is inconsistent. So this article makes an attempt to clear the differences between investment and speculation. Have a look.
Key Differences Between Investment and Speculation
Equity Research Tutorials. - Investors and speculators both put money into assets, enterprises and instruments in the hope of generating a profit. Beyond that, however, they are quite different.
Investors and traders take on calculated risk as they attempt to profit from transactions they make in the markets. The level of risk undertaken in the transactions is the main difference between investing and speculating. Whenever a person spends money with the expectation that the endeavor will return a profit, they are investing. In this scenario, the undertaking bases the decision on a reasonable judgment made after a thorough investigation of the soundness that the endeavor has a good probability of success. But what if the same person spends money on an undertaking that shows a high probability of failure?
Investment is sacrifice of certain present value for possibly uncertain future value. Investors in oil stocks essentially own oil and natural gas reserves. Speculators wait for the next news event. Gamble : To bet on an uncertain outcome. Example: Betting on a flip of a coin.