Investing and speculating

The Sunday Times carried a story about young people who were investing in stocks and CFD (contract for differences). Some made trading losses but are still keen to continue "investing" in the market.

It is important to use the correct term to describe the activity. It should be called "trading" or "speculating" and not "investing".

When one "invest" in a company, one has to study the fundamentals of the company with the intention of holding it for many years to earn its dividend and the long term capital gain. I  know of people who bought blue chip shares and kept them for 40 years. That is "investing".

Those who buy and sell shares to make a short term gain should be called "speculators" or "traders" and not "investors". There is nothing wrong with speculating or trading in shares, or gambling in the casino, if the speculator is aware about the risk and is mentally prepared for the consequence of making a loss, while pursuing a gain. It would be wrong to be deluding that they are "investing" in the stock market.

I hope that our financial journalists will use the correct term to describe the activity, so that the speculators are not deluded into thinking that they are carrying out an "investing" activity.