And just like that I am on day 21.
Today I am going to just talk about one point and that is please understand the difference between investing and speculating. Its not a simple trivial point. There are also no value judgements being cast about being a speculator. But unfortunately society tends to overrate investors and look down upon trader or speculators.
Graham and Dodd many years ago said: Investment "is a convinient omnibus word, with perhaps an admixture of euphemism - i.e., a desire to lend a certain respectability to financial dealings of miscellaneous character."
Investors provide long term patient capital and speculators provide short term liquidity and price discovery. We need both for markets to function efficiently.
Warren Buffett is an investor and George Soros is a speculator. Both are very good at what they do and they are very successful at what they do. But they dont pretend to be what they are not.
Warren Buffett offers a simple yet insightful take on this. Investment as Buffett explained: "And I say, the real test of how you - what you're
doing is whether you care whether the markets are open. When I buy a stock, I
don't care if they close the stock market tomorrow for a couple of years
because I'm looking to the business - Coca Cola, or whatever it may be, to
produce returns for me in the future from the business.” On speculation he said, "It's a tricky definition. You know, it's like
pornography, and that famous quote on that". (Supreme
Court Justice Potter Stewart famously wrote that, regarding whether something
was pornography or not, that, "I know it when I see it.")
If you are able to answer these simple questions upfront before buying then you would know what you are doing.
Given below are list of blogs which have received the maximum page views, so I assume they have resonated with a lot of people.
I have really enjoyed writing these blogs over the last twenty one days. I would be continuing to write on a weekly basis now. And I hope to be regular.
I would also like to say thank you to all the people who have contributed so far to my campaign for the Nudge Foundation. They are doing a wonderful job. I hope many of us come forward and support this cause.
You can contribute here: http://thenudge.ketto.org/anishpteli
Regards
Anish
QED Capital
Today I am going to just talk about one point and that is please understand the difference between investing and speculating. Its not a simple trivial point. There are also no value judgements being cast about being a speculator. But unfortunately society tends to overrate investors and look down upon trader or speculators.
Graham and Dodd many years ago said: Investment "is a convinient omnibus word, with perhaps an admixture of euphemism - i.e., a desire to lend a certain respectability to financial dealings of miscellaneous character."
Investors provide long term patient capital and speculators provide short term liquidity and price discovery. We need both for markets to function efficiently.
Warren Buffett is an investor and George Soros is a speculator. Both are very good at what they do and they are very successful at what they do. But they dont pretend to be what they are not.
In short, Buffett basically argues that what separates and
investor from a speculator is the intent of the person engaging in the
transaction. However, upfront it is very difficult to provide a precise definition of both.
What is important is to know what your intent is:
- Do you care the about price every hour or do you look at price once a month or quarter and evaluate your portfolio.
- Do you buy because your friend is buying or are you buying because you understand the business and have done your homework.
- Do you intend to hold on to the investment for atleast a few years or are in only for the next few days or weeks.
If you are able to answer these simple questions upfront before buying then you would know what you are doing.
Given below are list of blogs which have received the maximum page views, so I assume they have resonated with a lot of people.
- Day 6 - Understanding Greed and Fear
- Day 18 - Buy a home beta!!
- Day 1 - Introducing "Behavior Gap"
- Day 11 : Understanding Greed and Fear: Herding Bias
- Day 19 - Mutual Fund - Index or Active Management
I would also like to say thank you to all the people who have contributed so far to my campaign for the Nudge Foundation. They are doing a wonderful job. I hope many of us come forward and support this cause.
You can contribute here: http://thenudge.ketto.org/anishpteli
Regards
Anish
QED Capital
Important Disclaimer: Please do not treat anything on my blog as investment advice. I do not provide any recommendations of any stocks or securities. Any stock mentioned may be merely by way of an example
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