INVESTMENTS,SECURITY AND PORTFOLIO MANAGEMENT
This query is : Resolved
14 March 2009
DEAR SIR,
DISTINGUISH BETWEEN INVESTING AND PECULATING .IS IT POSSIBLE TO INCORPORATE INVESTMENT AND SPECULATION WITHIN THE SAME SECURITY
DISTINGUISH BETWEEN INVESTING AND PECULATING .IS IT POSSIBLE TO INCORPORATE INVESTMENT AND SPECULATION WITHIN THE SAME SECURITY
02 April 2009
Peculating is to embezzle (funds) or engage in embezzlement.
appropriate (as property entrusted to one's care) fraudulently to one's own use; "The accountant embezzled thousands of dollars while working for the wealthy family"
appropriate (as property entrusted to one's care) fraudulently to one's own use; "The accountant embezzled thousands of dollars while working for the wealthy family"
02 April 2009
On the other hand Speculation (in a financial context) is the acquisition of a risky asset on the assumption that it will be more valuable or less risky in the future. It can be contrasted with a pure business investment, for which the investor is compensated for the use of her capital and the risk of its loss.
02 April 2009
Investment vs. Speculation
Identifying speculation can be best done by distinguishing it from investment. According to Ben Graham in Intelligent Investor, the prototypical defensive investor is "...one interested chiefly in safety plus freedom from bother." He admits, however, that "...some speculation is necessary and unavoidable, for in many common-stock situations, there are substantial possibilities of both profit and loss, and the risks therein must be assumed by someone."[2] Many long-term investors, even those who buy and hold for decades, may be classified as speculators, excepting only the rare few who are primarily motivated by income or safety of principal and not eventually selling at a profit.
Speculators can be increasingly distinguishable by shorter holding times, the use of leverage, by being willing to take short positions as well as long positions. A degree of speculation exists in a wide range of financial decisions, from the purchase of a house to a bet on a horse; this is what modern market economists call "ubiquitous speculation."[citation needed]
Identifying speculation can be best done by distinguishing it from investment. According to Ben Graham in Intelligent Investor, the prototypical defensive investor is "...one interested chiefly in safety plus freedom from bother." He admits, however, that "...some speculation is necessary and unavoidable, for in many common-stock situations, there are substantial possibilities of both profit and loss, and the risks therein must be assumed by someone."[2] Many long-term investors, even those who buy and hold for decades, may be classified as speculators, excepting only the rare few who are primarily motivated by income or safety of principal and not eventually selling at a profit.
Speculators can be increasingly distinguishable by shorter holding times, the use of leverage, by being willing to take short positions as well as long positions. A degree of speculation exists in a wide range of financial decisions, from the purchase of a house to a bet on a horse; this is what modern market economists call "ubiquitous speculation."[citation needed]
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