MANILA, Philippines – In the easy language of the markets, those who buy and sell stocks can claim the title “investor.”
But according to financial adviser Salve Duplito, there is a thin line between being an investor and being a speculator.
To know the difference between the two, Duplito said you should answer this question: When do you buy a new stock?
If the answer to this question is when you think its price is about to go up, when it has started to go up, or when you hear about its great returns in the past years from a friend, then you are probably more a speculator than an investor, Duplito said.
She noted that researching and reading annual reports are practiced by investors because they calculate what a stock is worth based on the value of its businesses, rather than gamble that a stock will go up in price because someone will pay more for it.
“Taking the time to read reports shows you’re serious about investing as opposed to making a quick buck,” she said on ANC’s “On The Money.”
Vandermir Say, a shareholder at Berkshire Hathaway, agreed with Duplito, saying taking the time to do research is what makes an investor.
“If one is honest to oneself, it’s not that hard to figure out. Like reading annual reports, it’s either you’re reading them or not. If you’re not, it’s hard to call yourself an investor,” he said.
“You can’t call someone who engages in numerous one night stands as a sentimental guy, that is being applied to speculators,” he added.
Salve also noted that there are two types of investors, one who is committed to giving time and attention to investing and acknowledging that good research will increase returns or one who is content in being a passive investor enjoying possibly less return but putting in lesser time and work as well.
“Most of us want to enjoy high returns with less work or no work at all. Hence, the search for hot tips,” she said.