Speculator & Investor? What is the difference?

[-oo0(GoldTrader)]

What do you say?

"What is the difference between a Speculator and an Investor?"

 

[FTSE in mouth]

For me personally (I know not everyone will agree) it is:

Investor.... A long term Buy and Hold typr of person

Speculator..... Trades anything he/she can with derivatives and penny stocks over the day/short/medium turn to make money.

Here are some proper definitions:

investor

A noun

1 investor

someone who commits capital in order to gain financial returns

speculator

A noun

1 speculator, plunger

someone who risks losses for the possibility of considerable gains

HTH

FIM

 

[-oo0(GoldTrader)]

When I put this on the web a few years ago there were plenty of really good opinions.

Feb 26 2003,

"I consider myself a serious trader. I was having a discussion with a friend of mine who calls himself an 'Investor'. So I asked him, "What's the difference between a trader and an investor?" He replied, "I don't know, let me think about it for a while . . .

Not much action here

 

[ducati998]

9999999999999999

 

[Tuffty]

In my view there is no difference, in fact, we're all just gambling. The word investor was used by the financial industry to make the process of giving your money to someone to gamble with sound respectable.

 

[mokwit]

I would argue that someone who estimates the fair value of a stock based on discounted cashflows accrueing to the investor and then buys it if it is much below and sells it if it is much higher is an investor. Anyone who uses things like comparative multiples etc is basically trading/speculating as he is really playing market comparative psychology rather than market price vs. an estimate of intrinsic value.

 

[chump]

Ok,I'll bite....speculation is what the majority of people engage in to create wealth when they start out without same.....investment is what they graduate to when they set out to consolidate and retain that wealth..it signals a change in mindset that occurs when a particular goalpost specific to the individual is achieved..the two activities can run in parallel if the individual can maintain two different mindsets towards risk.

 

[peterpr]

In the context of this BB I suggest the question is one of semantics and largely irrelevant. There may be a few who consider themselves speculators and/or investors but I doubt they include many seasoned members.

I am a trader first and foremost. It is an occupation/profession - call it what you will, but I depend on it for my income. I have a few 'investments', by which I mean accruing pension rights etc, but instead of leaving management of them to a 'professional' manager, I manage them myself, which I guess makes me an investment manager too. I am certainly neither an investor nor a speculator in any active sense. My trading is in principle no different to that of the guys in the open outcry pits of a hundreds of exchanges throughout the world except that I do it on my own behalf. It is challenging, and sometimes tedious hard work, and I love it.

 

[koitaki]

An investor is a trader waiting for the stock prices to return back to what s/he bought them for.

 

[peterpr]

An investor is a trader waiting for the stock prices to return back to what s/he bought them for.

Wouldn't be a trader for long if s/he behaved like that - but yes, that's how most 'investors' behave - which is one of the reasons good money can be made from trading proper

 

[chump]

Peter,
I think you are confusing the term "investor" with that of 'saver'..they are world's apart..a saver places his funds away expecting a return (pensions et al) without much consideration of risk, a real investor matches risk to return..my view and yours may be different.

 

[peterpr]

Peter,
I think you are confusing the term "investor" with that of 'saver'..they are world's apart..a saver places his funds away expecting a return (pensions et al) without much consideration of risk, a real investor matches risk to return..my view and yours may be different.

All a question of semantics really. For example, what do you mean by "real" investor? - because if it is somehow different to 'investor', then we'd better include real speculator and real trader in this discussion, not to mention "active" and "passive" and a few other qualifiers.

I regard the activity (If that's the right word) of saving as simply putting aside a portion of income for purposes other than consumption - one of those purposes might be investment - however you choose to understand it.

But I don't see any of this contibuting greatly to the sum of investing, speculating, trading or saving knowledge really.

 

[chump]

"semantics'" no not really , my use of the word "real" was a reaction to the general approach of a definition that anyone who is an investor is simply a buy and hold merchant..someone who waits 'for prices to return to original purchase level"...as posited above I think by you and others...I make the point that such people are not investors because they have little concept of risk or value of return ..they are in fact typically hapless savers..but, I do agree that outside of the joy of arguing for arguments sake there is little profit in this discussion of 'labels'