my daily trading

My daily trading is my media for sharing my thougth, expression, and idea of stock market. I hope you can give your own opinion too about every topics that i posted

Monday, July 24, 2006

Investor, Speculator and Gambler

What is the difference? Very interesting question, isn't it? it is a trivial question, but sometimes a lot of people can not answer it.
Investor, speculator and gambler - all of them - are player in all market. But their population is not the same one to another. It is like a pyramid, with gambler is on the base and investor on the edge of it.

Let's start with the top of the pyramid first.
In my opinion investor is the man who can differentiate between value and price. They focus on the difference between value from its price. They know exactly how to differentiate whether this goods are undervalued or overvalued. Investor also has a great skill, knowledge and access to every information they need to analyze. They will scrutinize every piece of information, so they can come into the rigth conclusion about the value.

On the other hand speculator and gambler is the population that is out of investor. They don't have any knowledge to do as good as investor. They are only the follower, but there is a big difference between gambler and speculator. Gambler is the man who neither have a knowledge as an investor and want to use their brain. Otherwise, speculator knows their limitation, and try to get their opportunity by anticipating the unbalance situation. They will use their eagle eye to watch every signal of the bias in the market and then move with the bias direction for their own opportunity. Sometimes they are very opportunist. They admit for their knowledge limitation, so they always put on the higher respect for every risk they encountered.

If i may describe this situation as an warehouse auction ...the investor is the buyer who search - by her knowledge - for the low price item but still have high value either now or in the future. And the speculator is the one who only buy for the items that will increase in value, because there is a sign that public demand will increase dramatically for that items.
Which style do you choose?


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