MICHEL PIREU: Investulation no sound strategy
Distinguishing between investing and speculation is vital in safeguarding against losses, writes Michel Pireu
October: This is one of the peculiarly dangerous months to speculate in stocks. The others are July, January, September, April, November, May, March, June, December, August and February," Mark Twain said. In Confusion of Confusions, one of the oldest books written on investing in the stock markets (1688), Joseph de la Vega differentiated between wealthy investors, which he called "the financial lords", and the "persistent speculators" or "gamblers". The need to separate the two persists to this day, mainly among those who see the one, typically high-risk short-term trades, as a foolish activity and the other — buy and hold purchases based on "sound" fundamentals — as a sensible way to preserve wealth. Benjamin Graham and David Dodd, in their seminal work, Security Analysis defined an investment operation as one that, upon thorough analysis, promises safety of principal and a satisfactory return. "Operations not meeting these requirements," they said, "are speculative." Fred Schwed J...
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