Anyone who buys stocks and shares in the stock market, has always been calling themselves investors. What makes an investor? How is an investor different from a speculator?
Both investors and speculators buy and sell shares of company through the stock market. The difference between them is only the TIME factor.
1. An investor buys a business while speculators buys stocks.
2. An investor buys the shares of a company and hold them for a long time, at least 3 years or more while a speculator buys the shares of a company, hold them for a short time and sell them, either for a small profit or even at a loss.
3. An investor buys the shares only when they have enough money to hold them. A speculator does not have enough money to hold the shares, he normally contra the shares he bought.
4. An investor makes time to do research in the companies before making a purchase. A speculator simply buy and sell the shares without looking into the company's information.
5. An investor treats the stock market as a convenient place for them to own businesses while speculators treats the stock market as a 'casino'.
6. An investor has faith in his own investment in the 'wonderful business', he is not affected by the daily fluctuation in the share price. A speculator's emotion is affected by the daily fluctuation in the share price.
The above are extracted from my second book on investment. I would like to thank those who have bought and read my first book, "Route to Successful Property Investment in Singapore". Do look out for my second book on investment in wonderful businesses.
Are you an investor or a speculator? Do test yourself with the six points above and find out.