Investing is doing business, the purpose is to make money from a business itself.
Speculation, the purpose is to make money from other investors in a business. The business itself is profitable or not, and speculators don’t care.
For investors, if the investment in the business itself does not make money, then the investment is a failure.
For speculators, even if the company itself does not make money, as long as someone is willing to offer a higher stock price to take over, the speculation is a success.
Buffett bought back a lot of companies, directly privatized them, delisted or not listed, and only earning annual profits or dividends is enough. This is called “buy low, don’t sell”.
And if there is no stock trading or simply delisting, speculators will be dumbfounded and will not survive even a minute. He calls this a bargaining chip. Speculators’ lifeline is “buy low and sell high.”
Investment can be “buy low and don’t sell”, but speculation can only be “buy low and sell high”. This is the essential difference between the two.
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To add, there is not much of a necessary difference in security between investment and speculation. Investments are not necessarily all safe. Investing is also very risky. This way to distinguish the two, the difference is not big, it will be unclear.
Speculation is aimed at other investors. If you win, others must lose.
Investment is aimed at the profit of the company. What you win is what the company earns. Even if the company is not listed, you can still earn dividends. Well, that’s investing.
Most stock market transactions involve both investing and speculation, and there is no way to completely separate the two.
But investment must be the main body, and it is the investment that defines the margin of safety. Pure speculation is no different from gambling.
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