Speculator Or Investor? What’s The Difference?

Are you an “investor” or a “speculator?”

Over the last month, we have discussed the “false market narratives” that push investors to make portfolio mistakes. Such is why we previously discussed the “Investing Rules” needed to navigate volatile markets.

This past week, on the #RealInvestmentShow, we discussed the difference between being an investor, like Warren Buffett, and a speculator, which is both you and I.

In today’s market, the majority of investors are simply chasing performance. However, why would you NOT expect this to happen when financial advisers, the mainstream media, and Wall Street continually press the idea that investors “must beat” some random benchmark index from one year to the next?

But this defines the difference between being a “speculator” or an “investor?”

Graham And Carret

If you were playing a hand of poker and were dealt a “pair of deuces,” would you push all your chips to the center of the table?

Of course not.

The reason is you intuitively understand the other factors “at play.” Even a cursory understanding of the game of poker suggests other players at the table are probably holding better hands, which will rapidly reduce your wealth.