Read? Gambling - investment - speculation
Read? Known and Unknown?
In the stock market, instead of admitting that "I don’t know what I don’t know ", we turn it into "I think I know something that others don't know." That is speculation!
Investors or traders are all speculating at different levels using different method. Traders use charts to speculate. Investors use corporate and financial data to speculate. Basically, both traders and investors ultimately speculate on just two things: future earning and/or future cash back to shareholders.
There is no absolute certainty in knowing future corporate earning as there are just too many moving parts in them. We are just speculating on their future earning whether it is sustainable, growing or weakening.
Future cash back to shareholders
Investors and traders also speculate on future cash back to shareholders in form of stock dividends, special dividends, share buy-back, privatisation at premium. Just start a big rumor on any of these, the traders will jump in a big way.
In the stock market, all of us speculate!
Investing in stocks is a lot like lending your friend money - Note: This article is a collaboration between The Good Investors and The Woke Salaryman. It was written by me and edited by He Ruiming. An earlier version ...
32 minutes ago