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This strikes me as a somewhat semantic argument. Many stocks don't pay dividends. Flipping houses would also fall outside of your definition of investing. Buyin
by liquidise 7y ago
This strikes me as a somewhat semantic argument. Many stocks don't pay dividends. Flipping houses would also fall outside of your definition of investing. Buying gold has also been a relatively safe "investment" strategy as well, speculation or not.
Every form of investment is, at its core, speculation on some level. If i pour my savings into Apple and they tank, the dividends would pale in comparison to my losses.
- braythwayt 7y agoStocks that don't pay dividends are absolutely speculations. Flipping houses is absolutely speculating in real estate if you neither occupy them nor rent them out during the time you own them. Not all forms of investment are speculations at some level. If I own a landscaping business and invest in a truck, I can drive it until it goes to the junkyard. I generate a return that hopefully offsets the depreciation, and I might not get even a dollar for it when I'm done... I may even have to pay to get it towed away.
- mdemare 7y agoBerkshire Hathaway does not pay a dividend - is it therefore speculation? Surely not - its valuation is based on it’s earnings.
- ProxCoques 7y agoAnd stocks that do pay dividends are also speculations because they might cut the divi the day you buy them, or their price might crash, or they might go bust. All investment is speculation. Bitcoin is no different in that regard to stocks of any kind.
- prepend 7y agoStocks that don’t pay dividends invest in new capital and directly increase stakeholder equity. Not entirely, but apple’s price is based on a predicted future cash flow and growth in cash flow and assets. This is different from bitcoin.
- koolba 7y agoHouses are tangible assets which can be rented out for a direct rate of return. Gold is a better analogy though the physical existence and thousands of years of use as a store or value give it a pass compared to anything crypto.
- thtthings 7y agoEvery asset that produces an Income or has a possibility of producing income in the future is an investment. Everything else is speculation. Buying a commercial property and renting it out is an investment. Buying a house in the hope of selling it for more in the future is not investment. Same goes for Gold, Bitcoin, momentum trading in stocks in not investment. Buying a stock that does not pay dividend but is a real business that produces something is an investment.
- cookingrobot 7y agoBy that definition startup investors are speculators not “investors”. That seems like an overly narrow definition of the word, compared to how it’s normally used.
- marcosdumay 7y agoWhat startups are those that can never produce income? And why are people working on them?
- thtthings 7y agoHow do you know they will never produce income? Can you see the future? If you can, please tell me.
- DougN7 7y agoI like your definitions but it seems [buying] stock that pays no dividend (despite the business behind it) is still speculation. At best you can hope it will pay a dividend some day, which is speculation.
- thtthings 7y agoI think you are confusing risk with speculation. Every investment has risks associated with it. Even if a stock pays dividend does not mean it will keep paying it for perpetuity. Nothing is guaranteed.