Chapter 20 [What is investment]

Source:https://www.facebook.com/100063294665283/posts/552741530178998/

[James: Origins and Today] Chapter 20 - What is Investment (03/28/2023)

The biggest difference between investment and speculation is that investment puts funds on an asset that will grow. After a period of time, the increase in sales of products and services and the increase in added value will drive turnover growth and profits, causing the company's asset value to grow, and investors will receive returns from the company's value growth. Usually such returns require the accumulation of time and cannot be achieved in a short time. If the business model of this asset is valuable, it can grow in the long term. There was no such thing in the past and now there is There will be more in the future, and usually such companies can go a long way, so Buffett said that the investment time is a lifetime, and this is the truth.

Speculators do not trade time for profits, but play a zero-sum game, buying low and selling high. When one speculator makes a profit, another speculator must make a loss. After deducting handling fees and taxes, all investors will eventually lose money and go bankrupt, and are eventually forced to leave the market, so this is the fate of all speculators. This is why none of the rich people we see are speculators. In the world of financial investment, the real richest man in the world is Buffett, a long-term value investor. This has proved that all speculators have no chance to get rich, as they did not in the past. Fellow speculators, do you think you are the impossible in the world?

The market is unpredictable and happens randomly, just like a bird jumping around on a tree. You don't know whether the bird will jump up or down next, or whether it will suddenly fly to a higher branch or fly underground, so you can't predict the path of a bird. This is just like you can't predict the short-term fluctuations of the stock market.