Investing Speculating and Trading

Chapter 1 of the ‘Intelligent Investor’ explains the difference between investing and speculation. In order to understand the difference the two terms as discussed here. We also give a brief description of our definition of trading. The aim is to allow the reader to categorise themselves as undertaking operations in investing, speculation or trading.


Investing

  • The ‘Intelligent Investor’ describes an investment operation is one, ‘which upon thorough analysis promises safety of principal and adequate return’.
  • The intention of the value analysis in the reports is to give the investor the information to assess ‘safety of principle’ and ‘adequate return’

Speculation

  • Speculation is anything other than investing, although trading is covered separately. There is nothing wrong with speculation and many ways to do it and there is some speculation in all securities’ purchases.
  • The reports only cover the investment element and will avoid any speculation related to future conditions.

Trading

  • Trading is a way of taking advantage of the normal fluctuations in price that can be expected in a publicly traded security.
  • The report service is not intended as a trading tool and short term price fluctuations are not the remit of this service.
  • Please note that the usual price fluctuations experienced by listed securities affect investment as much as speculations and trade, but the purchase of securities as investments will not normally the change the original reason for the purchase of an investment.