Investor: Someone who makes an investment with the expectation of a long-term increase in value.

Speculator: Someone who buys an asset in hopes of a short term change or fluctuation in price.

Investor: LONG-TERM INCREASE IN VALUE

Speculator: SHORT-TERM CHANGE IN PRICE

One the challenges that we faces as investors (vs. speculators) is that it is rare to hear from other investors.

Most of what we hear is from the speculation industry. Talking about the core principles of investing is boring. Talking about speculation is exciting.

CNBC is exciting. CNBC is entertainment. CNBC is talking about speculation.

The speculation industry (or the financial entertainment industry if you prefer) does not make money based on investment activity. They make money talking about SHORT-TERM CHANGES IN PRICE.

Investors make money based on their investment activities.

Now back to the problem: Investors don’t talk much. What they have to say is generally boring (how many times can you find new ways of saying “buy great things and hold on to them”) and for the most part no one listens to them. But if you look carefully you can find hints of what investors are doing. In a rare exception to this general rule, Warren Buffet wrote an Op-Ed piece in the New York Times this morning. It is worth a read. (Link Here)

Next time you are tempted to act on something you read or heard, ask yourself: “Is this advice from an investor or entertainment from a speculator?”

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