Benjamin Graham the mental founder of value investing always emphasized that it´s extremely important to know the difference between an investment and speculation. Nowadays many people believe that they are investors just because they read some news about the company they buy stocks of and think that the price will go up just because the stock chart is so and so.

However that´s not true in most cases value investors actually even don´t care about stock prices. An investment is present if it promises the safety of the set in capital as well as a profit on the set in capital after a detailed analysis, everything else is speculation. So according to Benjamin Graham if somebody buys a stock without analysing the balance, the environment and the cash flow statement of a company he is a speculator. Even if this person has read some news about the company and is sure that the price of the shares will rise this person is a speculator.

On the other hand an investor always analyses the balance and combines it results with the news and information of a company. In the end an investor should always get a value which defines what the company is worth in his eyes right now. Based on this value his either buys or sells a stock, but he would never buy a stock because he read a great article about this stock or the 38-days line crosses the 200 days line or something like this.

Nevertheless it has to be said that it´s not forbidden to practice speculation, there are also some guys who are quite good in this field. But it´s important to understand that there is a difference between building up a fortune by growing with a company and trying to get rich quick by trading in shares of a company.