A Deep Dive into Investment vs Speculation - Navigating the Fine Line for Financial Success

13 Apr 2023

It is difficult for many investors to understand what is investment and what is speculation?

Is the stock itself a speculation or an investment?

Investment itself has its own risks, everyone knows that stocks are extremely risky. But there are very few investors who really make money. The main reason is that it is not easy for any investment rate of return to be 5%, which is as low as that, or even 1% lower. But so many investors come to the stock market to open accounts, are they here to earn 5%? Certainly not!

This little question will let you figure out what is investment and what is speculation!

If you want to get rich overnight, then stocks are speculation for you. If you want to make long-term and stable money, and you want to earn dividends + money for business development, then you are investing.

So the stock market, how to define stocks as investment or speculation?

The stock market is such a place, with its own extremely high risks, so no matter what stocks you buy, I think it has at least 30% speculative attributes. Holding stocks for too short or too long will increase the risk.

Holding stocks for too long: It will lead to high-quality stocks that may deteriorate later, and you will lose money after making money at the beginning. There are very few stocks that can really make money for a long time for many years.

The holding time is too short: it will cause the stock price to be easily disturbed by various short-term factors. It is a really good company, but if you buy it in a bear market, it is normal to lose money, and you can earn it back later, but your confidence is early. It collapsed, and it is likely to cut the flesh and leave.

Buying stocks involves taking risks. The key to the specific risk level is not the stocks themselves but the investors. You come to the stock market with unrealistic fantasies, what stocks do you buy without speculation? Not gambling?

Is this the reason?

The best stocks, the stocks that have risen the most at present, don't they have a time to fall? Is it just rising every day?

Of course not, any stock will fluctuate.

So I think investment is still speculation, and the key point is not in the stock market and stocks at all.

It is the most important thing for investors to treat investment rationally!

As long as you come to the stock market, I think you should not take it lightly. Even the so-called best investment philosophy, perfect value investment system and undervalued model algorithm, these cannot be used as reasons not to lose money.

Not losing money must be the result of a combination of factors. Just investing in an undervalued good company is definitely not enough.

How is the market? What is the future of the enterprise? How does the fund operate the stock? How is the company's industry this year? There are still many details, all of which are working together to determine the direction of this stock price.

Not to mention short-term speculation, it will be more unstable, it will be easier to lose money, and there will be more unstable factors.

Compared with fundamentals, news, and technical risks, everyone's indifference to the stock market is a greater risk.

Many investors regard the stock market as a cash machine. Many investors have never thought that they can lose so much in the stock market. After all, the stock market is not a beast with obvious fangs. You only know how powerful the stock market is if you have actually lost money, but If you really lose money, it will be too late, and the principal will be lost. If the money is more, it will take many years to come back, the time cost is too big.

Stock investment should be exactly speculative investment.

How to understand?

It means that there must be speculative elements, but there is indeed a clear investment route for you to invest. Risks are inevitable, but only a matter of probability.

No matter how great the winning rate is, there is no 100% chance, because this is the stock market, a place with unlimited possibilities. It is normal for short-term skyrocketing and plummeting, and it is common for companies to change face in the long-term.

Only after you have a deep understanding of these inevitable risks can you improve your risk awareness and prevent problems before they happen. This is the stock market.

It can only be said that every ordinary investor is a speculator in stock trading, but everyone can reduce the overall risk through various experiences, learning, and strategic methods, so that your speculation is lower risk than others, and it can be called an investment. Looks like an investment. But it is also impossible for us to make money without selling it, and it is impossible to truly hold stocks without selling them, just eat dividends, and only invest in companies without looking at stock prices.

This is impossible!

Even if our starting point is to invest in companies, when the stock price rises, we will still sell, because we are ordinary investors, we want to make money, and making money is more important than equity!

There are no people who have never lost money in the stock market, only those who lose money until they wake up and those who will never wake up. There is really no shortage of opportunities in the stock market, because the stock market is risky, and no matter how stable the investment is, there is a shadow of speculation, so the stock market has great opportunities! Can you understand? The risk in the stock market is profit, and the risk is so high because the profit is too large.

The continuous bull-bear conversion of the stock market may be late, but it has never been absent.

Some investors understand after going through a round of bear market and bull market transition. This kind of investors are investors who can make money in the stock market sooner or later. This is their understanding and talent.

Some investors buy randomly as soon as the bear market is over, but when the stock market gets better, they start buying stocks randomly , thinking that they are going to get rich overnight.

Therefore, investing or investing in the stock market is inseparable. If you dare to come to the stock market, you must dare to lose money. The point is not to lose money but to sum up experience.

It’s normal for you to buy junk stocks once or twice, it’s normal for you to buy junk stocks ten or twenty times, and it’s not normal for 100 or 200 times, which proves that you have never learned anything from losses, and you have never really learned anything. I never thought about why I lost money.

If you buy with greed, you will inevitably have a high probability of losing money.

It is the investor's own opinion on the stock market that ultimately determines whether the stock market is investment or speculation

Only people with extreme self-control can achieve the perfect unity of knowledge and action, and truly trade like a robot, and they will truly enjoy the rewards of hardships.

Finally, I wish you all health, happiness, freedom, and money!

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