What is the Difference Between Investing and Speculating ?

Benjamin Graham defined speculation in his classic book, The Intelligent Investor, as primarily “anticipating and profiting from market fluctuations.”
He defined investing as “acquiring and holding suitable securities at suitable prices.” When it comes to investing, valuation always matters.

The FaceBook IPO has been a good example of “The Difference Between Investing and Speculating”


Consider a volatile junior gold mining company that has an equal chance over the near term of skyrocketing from a new gold mine discovery or going bankrupt. With no news from the company, investors would tend to shy away from such a risky trade, but some speculators may believe that the junior gold mining company is going to strike gold and may buy its stock on a hunch. Speculators look for a high return on a spec investment.
Many speculative investors will buy several companies in a growth field and hope that one or two pay off big in order to cover the losses of the companies that fail to produce a profit.


Consider a large stable multinational company. The company may pay a consistent dividend that increases annually, and its business risk is low. An investor may choose to invest in this company over the long-term to make a pre-determined satisfactory return on his or her capital while taking on relatively low risk. Additionally, the investor may add several similar companies across different industries to his or her portfolio to diversify and further lower their risk.

I hope the above trading information was of help to you.

Anthony DiChi at TradeCurrencyNow,
America’s Forex News and currency information source.