Posted by Benjamin Poh > 2018-04-09 21:25 | Report Abuse

Investing should be more business like, as business owner you should study the basic economics of your business, the financials and your competitive strategy before your start to invest. As a speculator you try to speculate the near future events that will drive the price of what you bought, if u are right, you may earn substantially but if u are wrong u suffer greatly! Your results as a speculator tend to fluctuate wildly n most of the time you don't sleep soundly especially you borrow further to invest. Because of the large turnover, speculators tend to incur large trading costs and wild flatuation in price, it is difficult for compounding effects to work for their investment. As an investor you study the assets, earning powers and cash flow of the business and understanding the basic economics of the business in making its earnings and cash flows. Your first principle of investing is to protect your principal from erosion through your ignorance of the risks involved. But total risk avoidance is not possible for share investing, if you cannot take calculated risk then best to put your money in money market or FD or some quality bond funds. Even you study the fundamental and historical financials of the business, you are not foolproof from losses if the fundamentals slowly turn bad until you discovered it as these are a lot future uncertainties beyond the human reach and ability to control so some keep in touch with your investment is key to monitor your investment risk and return as the fundamentals can either turn down or up over time due to industry competitions, regulations, technology and political issues. It is best to concentrate your investment on less than 10 different counters which are within circle of competence to understand and monitor. Let the compounding effects to work for you year in year out consistently if you can hold a few quality business with competitive advantages or small companies with decent growth 10% above n with a decent return on equity at least 15% above.