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Choosing the Right Corporate Training
According to a Gallup Poll, 80 percent of employees said the availability of company-sponsored training programs was a factor in deciding whether to accept a new job or stick with a current one. And yet the Bureau of Labor Statistics says that...
How Do You Rank in The Investing Hierarchy?
Copyright 2006 CashFlow Avenue
You probably have heard this saying before - "It is lonely at
the top." If you find yourself in this position, then you are
probably at the top of your own niche. Our society is made of
hierarchies. Most...
How To Protect Yourself If Investing Online (Part One)
This is the first in a series of emails designed to give you
the basic knowledge you need to make significant amounts of
money investing online.
First, let's examine what HYIPs are not. They are not insured
investments. They are not...
The Nasty Truth About Mutual Funds Investing
Here are some facts that might make many fund investors question why they have chosen to invest in funds at all. According to John Bogle, former CEO of Vanguard Funds, one of the most trusted authorities on investing in mutual funds and a strong...
Wholesale Real Estate Investing
Copyright 2005 Brad Eden
Consider these parameters for a real estate deal:
Property Value: $250,000
Purchase Price: $160,000
Repairs: $2,500
If you analyze the numbers, you see that the equity available in this deal is $87,500 (Property...
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Investing and Speculation
People often see other people's decisions as the result of disposition but they see their own choices as rational!
Investors frequently trade on information they believe to be superior and relevant, when in fact it is not and is fully discounted by the market.
On one side of each speculative trade is a participant who believes he has superior information and on the other side is another participant who believes his information is superior. Yet they can't both be right!
Speculation (a.k.a. gambling), is not investing, and in one form or another has been around forever!
Many researchers theorize that the tendency to gamble and assume unnecessary risks is a basic human trait. Entertainment and ego appear to be some of the motivations for people's tendency to speculate. People also tend to remember successes, but not their failures, thereby unjustifiably increasing their confidence.
"Psychographics" describe psychological characteristics of people and are particularly relevant to each individual investor's strategy and risk tolerance. An investors background and past experiences can play a significant role in the decisions an individual makes during the investment process.
For instance, women tend to be more risk averse than men and passive investors have typically became wealthy without much risk while active investors have typically become wealthy by earning it themselves.
The Bailard, Biehl & Kaiser Five-Way Model divides investors into five categories:
Adventurers:
They are risk takers and are particularly difficult to advise.
Celebrities:
They like to be where the action is and make easy prey for "fast-talking brokers."
Individualists:
They tend to avoid extreme risk, do their own research, and act rationally.
Guardians:
They are typically
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older, more careful, and more risk averse.
Straight Arrows:
They fall in between the other four personalities and are typically very balanced.
In speculation two things will be always around:
A. There will always be people willing to speculate and
B. History always repeats itself!
Speculation objects, rules and technological methods will always be changing. But, what has happened before will most likely happen again.
Whether it's tulip bulbs, precious metals, bonds, lottery tickets, ball games, or stocks, human nature is human nature. Ignorance, fear, greed and hope determine how people react and thus how prices move and markets behave.
People have speculated on almost everything at one time or another. Speculating, trading and investing on stock prices have become an essential part of our lives and economy. Trading is just another word for speculating, and investing is nothing more than speculating, except that it supposedly encompasses a longer time horizon and for some reasons it implies less risk.
Speculation and gambling are similar, with a few important differences. One major difference is that sometimes, successful speculators profit due to their skill, while gamblers prospect due to their luck.
Whether a trader, a speculator, or a gambler in all cases the aim is to make a lot of money in a harry, and to be able to know when not to invest!
About the Author
Copyright © 2005 Ioannis - Evangelos (Akis) C. Haramis
haramis@greekshares.com
http://www.greekshares.com
Ioannis - Evangelos (Akis) C. Haramis was born in Athens, Greece in 1951. He studied in Greece, in USA and in Belgium and has been active in the stock markets since 1972. Since 2002 he is New Business Development Managing Director at an Investment Bank and the editor of http://www.greekshares.com
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