I'm a "Speculator " !

Yes, I’m a “ speculator “, is really hard to differentiate and draw a dividing line between “speculator and investors “ as both words being used interchangeably from time to time, depending on the situation, one was in.


Sometimes I noticed that people buying certain stock in anticipating the price will move up soon,, but when the price dropped eventually, he suddenly became an “investor “ that claiming to hold the stock for the long term. Hence we say in Chinese: 投资 投机 只是一线之差




But in late 18s or early 19s century, most of the books define “investors “ as “speculators “.


“ Quote from Online Etymology Dictionary

The 1590s, "view mentally, contemplate" (transitive), back-formation from speculation. Also formerly "view as from a watchtower" (the 1610s). Intransitive sense of "pursue truth by conjecture or thinking" is from the 1670s. Meaning "to invest money upon risk for the sake of profit" is from 1785. Related: Speculatedspeculating.

The word speculate evolve from “ view or observe from watchtower “ to Pursue truth by conjecture thinking “ then to “ invest for the sake of profit “.
If our ultimate goal of investing is to make money or profit from the market … then I would say, we all are a “speculators “ to some extend.

I like to read classic books and have few to share, e.g :


1) The Psychology of speculation by Henry Howard Harper, published in 1926
2) The Fact about Speculation by Thomas Gibson, published in 1923
3) Why You Win or Lose : The Psychology of Speculation by Fred C Kelly, published in 1930





Although these books are having the title of “speculation “,, but most of the discussion or highlight is on investment and fundamental analysis. Understanding Psychology impact and using the statistic being frequently mentioned in these books.

You may find the words like “ Margin of Safety “in page 45 book 1 or “Intrinsic value “ ( page 29 book1 ), also page 18 and page 5 in book 2 as well as element and importance of “time “ in any investment cycle ( page 107 ).

You may also take note that these books were being published well before the two books written by our “Father of value investing i.e: Benjamin Graham ), Security Analysis (in 1934 ) and Intelligent Investors (in 1949).

The words of “value, margin, cycles “ widely used in these books, so don’t judge the books by its cover that these are purely books on “speculation “. One may gain much wisdom from these classic books, also remember that “ history repeats itself “.  We may learn from the “old crisis “ and understanding the psychological impact on these events, try to avoid the mistake and hopefully to minimize the lost.

Allow me to quote a few sentences from these books, which I think still related in today’s investing world.


1) Speculation (investing ) is truly an unbeatable game, but it is not an unbeatable business. ( if we think that buying of security is an act of buying a business – added by me)

2) The idea of operating successfully for “quick turn” in the security market is another delusion.

3) Those who would make money speculating (investing ) should first, understand that it requires as much caution and business acumen as any money-making enterprise, plus s some knowledge of the psychological handicaps also the rare faculty of maintaining a complete mastery over one’s impulse, emotions and ambitions under the most heroic test of human endurance.


I enjoy reading these classic books and try to pick up the points which are still valid and related to today's investing world. Again, don't judge a book by its cover and learn as much as possible from all investment ideas with open-minded. Same apply for investing methods, be it Fundamental Analysis (FA) or Technical Analysis ( TA),, so long as we could have a decent return or beating the market eventually by using any of these methods.

Cheers !!  So, are you an “Investor “ or a “ speculator “?

My next blog is about: I am a " free rider " ! ... stay tuned...

PS:
Another great book to share if you read Chinese: a book by German's great investor:  Andre Kostolany: Germany's Stock Market Guru.

For value investors, we basically heard about the story of great investors like Warren Buffett, Benjamin Graham, Peter Lynn, John Templeton, John Neff, Jim Rogers etc… but sometimes reading stories from different kind of investors or " speculators " are also quite fascinating and we may gain some knowledge on it. 


Famous quotes from Andre Kostolany :

1) Psychological create 90% of the market. 

2) "Never run after a bus or a stock. Just be patient - the next one will come along for sure."

3) " We must be well-trained, calm, sometimes to be cynical, to ignore the mass hysteria, which is a
prerequisite for success."
"












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