10 November 2012

Investment, Speculation and Gambling: First Things First

Recently, I create the first filter to make my investment decision more wisely, that is, I must answer the question as stated below:

"Is this purchasing a good investment, or a good speculation or simply a gambling?"

Criteria of Investment:
  • Good price to buy a historical proof asset that provides good and stable cash flow instead of dividend yearly.
  • Good price to buy a special asset that has very high potential to grow sustainable and significantly.
Criteria of Speculation:
  • The market prices wrongly due to the fear of people. Good time to cheap buy some for short term.
  • The market prices wrongly due to the ignorant of people. Good time to cheap buy some for long term investment.

Criteria of Gambling:
  • Simply hope to get profit from the technical rebound based on the so-called signals.
  • Simply believe the price is so cheap and should rebound soon.
  • Greed to earn any potential profit from potential rebound.
  • Fear to loss the chances to earn the potential profit from possible rebound.
After I have categolize my thought carefully, I will only make buy decision if the potential purchase is either investment or speculation. This is because the probability to gain profit from an investment or a speculation is much higher than a gambling.

Lastly, I must highlight that the so-called speculation in this post is a speculation that based on the data from extensive homework and deeply logical thinking. Any purchase made without referring to sufficient homework and logical thinking is simply a gambling activities. That's all for today. More fascinating articles and sharing will be updated from time to time in Xaivier Blog. So, you are welcome to subscribe our feed, look at our sitemap or simply visit our Homepage.

Written by: Xaivier Chia


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