Investing vs Speculation

Here’s a really clear view of the difference of investing vs speculation. We all know that the 3rd Telco is coming. We all know the companies who wants to bid. And most of those companies (that are public) are going up and down with their stock price. Even if those companies at present have no earnings power and is not justified by the amount of stock price relative to its assets.

This is speculation. Of all the companies that are vying for the 3rd telco spots, how sure are you that the one you invest in, is the one? The one that will make you rich. I can see a lot of insiders selling their shares in the market, taking advantage of the hype surrounding the news. Other companies might just be getting into the bandwagon of bidding just to raise their share price and dump the shares into the public market. Its actually easier than having to generate value. Just bid for the 3rd telco spot for free and you can see your company’s share price skyrocket, fueled by hungry speculators who wants to be rich. Who doesn’t? And who cares?

I care a whole lot. So that I know what to avoid. 🙂 The madness of the crowd maybe funny to look at. People who are desperately trying to be rich quick. Some may actually get rich in this no doubt, but its not our game. Investing on the other hand is a slow patient process of only betting on sure things. Speculation may be exciting, but you have to bet on things that are unsure and beyond your control. Investing for me is a more rational approach.

Here are the 3rd telco bidders:

Sure enough, the stock price of the companies that are in this list has been skyrocketting. Aside from the private companies, of course. And there has been an increase in that list as more people wanted their stock price to increase as well.

For value investors like us, it may be tempting. But our approach must be sure and rational. Value investing may not be for everyone.

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