The Intelligent Investor: Chapter 1

hello friends, I am a Laxman today’s we see Chapter 1 of The Intelligent Investor. In this chapter, we discuss Investment and speculation. Chapter 1 of The Intelligent Investor book, explains the difference between Investment and speculation. If you understand the difference between investment and speculation, then you learn the real investment principles from chapter 1 of The intelligent investor book.

The previous chapter

Investment vs Speculation:-The Intelligent Investor: Chapter 1

Investment: Investment is like you take the decision and that decision has the proper reason. So that Investment decision called Investment. Investment maximum time you make money.

Speculation: Speculation is like you make a decision without any proper reason or logic. Just you think is a good decision and the result you think always be positive. In speculation maximum time you lose money because you are fully dependent on luck.

Benjamin gram provides the Three Element of Investment for every Investor who tries to make money. Let’s see that element.

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3 Element of Intelligent Investor Investment:-The Intelligent Investor: Chapter 1

Do a thorough analysis of Company
Take the promises of the safety of Principle
And also promises of Adequate Return

If you consider the above point get some logic and Investment meaning behind these 3 elements. If you ignore this point and make an investment you are doing simply speculation. Finance world, one quote is like ” If you make Investment you make money for yourself, and If you speculate you make money for your broker.”

Benjamin Gram Give some point of Unintelligent Speculation, they are as follows

Unintelligent Speculation of Investor:

Speculating is happen when you think you are Investing.
When you speculate and Take it seriously.
And also Taking risk more money than you can afford

Benjamin Gram gives the above point of Unintelligent Speculation. the author also said Speculation can be made fun of you by doing the following points. (The Intelligent Investor: Chapter 1)

Speculation can be fun:

Mad money account: Benjamin gram said If you want to test your luck or destiny then make a separate account and give them a name i.e. Mad Money Account. In this account do not put all your money, Put aside a portion of 10% of your all-over investment amount.
Never add more money no matter what: If your luck is good and you want to make more speculation or also any think, You can not add more money in that account whatever it takes.
Never mingle mad account with Investment account activities: Don’t be mix the speculation account and investment account.
Not Even In your thinking: The thinking pattern is matters here if you make the separate account keep them separate and not think to mix them. You can learn how to control your own behavior because investors are the enemy of themselves, we see in the introduction part of this book.

considering the above point, you can make the Speculation fun. In the next chapter, we see Inflation and Investment.

Next chapter 2