These days it seems that any purchase is thought of as an investment. I just “invested” in a new pair of shoes, or an ice cream cone. Bah! Humbug!
You are only investing if
- You consider valuation.
- You buy to realize an expected a positive return.
From this, it follows that anyone with a dollar cost averaging stock “investment” plan is not really investing. They are simply saving in a “currency” denominated in stock. It also follows that those who buy with no idea of the internal valuation of an asset are merely speculating.
Hence we conclude that there are far fewer investors among us than we used to think.
Originally posted 2009-07-01 00:25:20.