Are you an Investor or Speculator?? Judge Yourself !!

There's a fine line that we have to thread between investor and trader, so I think that's important to know on roughly which side of the line we are staying on. As we have come to know, investing is something that brings about good returns in the long run while speculating focuses on short-term gains and bears a much higher risk of losing principle. Anyway, so in this post I'll be covering the differences between the two.


Investor looks at the company, speculator looks at the market sentiment

Investor  invests in companies that are able to generate good returns for the money over the long run. Usually Investor looks at the financial statements of the company, the management, its economic moats, etc to get a good idea of how well the company will grow and paying a reasonable price for that. Speculator on the other hand is not based on such fundamentals and focuses more on the "speculative value" or perceived value of the company above the investment value of the share.

Investor  has a reasonable chance for gain, speculator does not

This links back to the previous point, investor has its roots in the quality of the company and the investment price, while speculator looks at market sentiment, which can result in an impairment of principal if market sentiment is read wrongly. While investor also bears a certain element of risk, this is usually a calculated risk, while trying to read market sentiments makes no guarantee as to any gains.

I think these two yardsticks are the ones that divide Investor or Speculator.