Question

Mr. Warren Buffet an investor or speculator? What are the reasons behind your view? and what is the differences between invest and speculate?

Identify and explain the possible factors that might have made him one of the most successful money makers from the stock markets?

Please explain your own idea as possible as you can

Answer 1

Let us understand how investing is different from speculating.

In investing, you do fundamental analysis of the company's share and if they are fundamentally good (i.e their earnings, profits, future projects, etc.) then you invest in its shares. Such investment is made not with intention to make quick profit but to have ownership of company with wealth maximization principle.

In contrast, speculator is one who is least interested in how company is conducting operations. Speculators buy and sell shares to make quick profits based on price action.

Warren Buffet is definitely not a speculator. He believed in concept of value based investing (i.e investing in fundamentally strong stocks ).

He started investing during his early teens. Major breakthrough for him was when he invested in Berkshine Hathaway after analysing fundamentals of the company. Similarly, he started diversification of his shares with more such investment in fundamentally strong stocks. He did not have intention to sell it but hold it for long time. This lead to increase in his net worth and thus became one of the most successful investor of all time.