Speculator vs Investor
Are you a speculator or an investor? If you’re into the stock market, it is most likely that you are a speculator. Unfortunately (or fortunately?) you are not the only one because the majority of the people in our stock market can be considered as speculator – from the fund managers, to the billionaire investors, to the aunties selling vegetables in the market.
And our stock market value is nothing but a result of all these speculations. There are times when our stock market does not reflect the actual value it has….and a technical correction is inevitable. Sometimes, such correction can reap in profits for the speculators, but most often than not, it will only make them lose a lot of money.
So what exactly is a speculator and what is an investor?
Speculator is someone who guesses, based on some complex calculations, the value of a stock. And people who time the market can be considered as speculators too. Anything that is not 100% true is considered as speculation. Even if the speculator is confident that 99% of the time, his guesses will be correct..there is still the 1% chance that it’ll fail. The speculator is very active in buy and sell activities.
Investor, on the other hand, invest in a company because he/she likes and understands the business. He is willing to hold the stock irregardless of what is happening to the stock market. And he/she will not try to guess the performance or the “actual” value of a particular stock based on some complicated calculations. Buy and sell activities will not happen often.
To cut things short, our stock market is populated by speculators who buy and sell without looking at the true value of a company. True, speculators do earn a lot but they also lose a lot. Warren Buffet is not a speculator, he is an investor. He hardly sells any of his stocks! So from here, you can see that investors actually earn more and win in the long run….but the 1 thing that every investor needs to learn is patience. Because the stock market will, without a doubt, go up and down like there’s no tomorrow due to speculation activities. The investor will just have to stay put and trust in the company that he/she invests in.
For me, I used to be a speculator and I’ve lost a lot. Nowadays, I prefer to invest and just put my money there. It takes less time to monitor and the risks, to me, are lower too.
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Comments
@ Damien
IMO, speculator = gambler. Both place their bets based on certain figures/complex calculations. 
Actually i believe stock market is so high and ‘rewarding’ due to the speculators but it doesn’t exist just because of speculators. If there’s no speculator (which will never happen), stock market will still be there but maybe it’s not as interesting and appealing to others. It could be just another thing that nobody wanna look at.
For me, stock market provides an easier way for investors to invest in the businesses they like and know. And this is particularly useful for small time investors. Without stock market, it’ll be harder to invest in a company. That’s as far as i know anyway.
Care to share your perspective on the difference between a speculator and a gambler?
If you studied Wall Street’s history, you’ll find it grew from speculative activity since the 1920′s. They invented margin financing and contra trading to enable everyone to speculate, including the poor. They were feeding stock prices to ticker tape machines in salons so the ladies can play the game while getting their hair done. Speculation created a new wealthy class. The rest of the world loved what they saw and followed suit.
During the 1929 crash, thousands of speculators committed suicide but as you know nothing attracts people like the smell of money and the situation really hasn’t changed today. Stock markets exist for speculators. I say that becoz you don’t actually need a stock exchange to invest in a company. That’s why without speculators and short-term loans to encourage speculative betting, I think these exchanges will die.