Book Summaries Business

Chapter 1: Investment Versus Speculation (The Intelligent Investor)

Keep investments and speculation separate. If you must speculate, make sure it is no more than 10 percent of investment funds.

There is intelligent investment, but also intelligent speculation.

Intelligent investing includes: 1) analyze soundness of business’ fundamentals. 2) a plan to prevent catastrophic loss. 3) pursuit of reasonable return.

To speculate means to bet that the market price will conform to your expectations. Stupid speculation is when you speculate while you believe you are investing, speculating without the necessary knowledge and skill, and speculating with money you cannot afford to lose.

Many on wall street promote speculation because it produces money for the industry. Trendy formulas and systems are promoted, they may work for a while, but they all end up failing.

A successful speculator must act ahead of the latest trend. This is in contrast to intelligent investing, where trends don’t matter.

"Silence is the best expression of scorn" - G.B. Shaw

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