There is a big difference between investing and speculating (gambling), but if you ask a lot of people what that difference is they won’t be able to tell you in a clear, succinct way. Thankfully, Warren Buffett did just that.
“If you’re an investor, you’re looking at what the asset is going to do,” Warren Buffett said at the 1997 Berkshire Hathaway Annual Meeting. “If you’re a speculator, you’re primarily focusing on what the price of the object is going to do independent of the business. . .”
For Buffett, the bottom line is simple: “Investment is putting out money to get more money back later on from the asset. And not by selling it to somebody else, but by what the asset, itself, will produce.”
Warren Buffett on the Investor and the Speculator
See the complete Lessons From Warren Buffett series
© 2021 David Mazor
Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.