Online Campaigns, Online Advertisement and Common Sense

Reference Points For The Reasonable Investor Part 1

The first question which Benjamin Gram suggests to solve to the person who has paid attention to stock market is that how he will be engaged in it: investments or gamble? It was always useful to do distinction between concepts “investment” and “gamble”, especially in relation to common stocks.

Usual term “investor” is used as an antonym to concept “speculator”. As there is no uniform standard determination of concept ?investment activity?, specialists can make such determination which most of all is pleasant to them.

Many of them deny existence any useful, from the practical point of view, a difference between investments and gamble concepts. ???? considers that such position is fatal, as encourages congenital propensity of people to gamble in stock market.

In 1934 in the textbook Security Analysis authors had been undertook attempt to specify distinction between these concepts which sounds as follows: ?Investment activity means that the investor on the basis of the serious analysis assumes both laid-down capital compensation, and reception of the corresponding income. Operations which don’t meet these requirements are speculative?.

Gram writes that in itself gamble in stock market isn’t neither illegal, nor immoral. Besides for the majority of people it also is non-profitable. Moreover, sometimes gamble is necessary and inevitable, as many operations with simple shares give possibilities both to get profit, and to lose, therefore the internal risk should be taken into consideration by everyone who performs such operations. There is just as reasonable gamble, and reasonable investment.

But there are many situations at which gamble can be unreasonable. Benjamin Gram in the book ?Reasonable investor? reduces these situations to the following:

1. Gamble in that case when you intend to be engaged in investments.

2. Scale gamble if you feel shortage of corresponding knowledge and skills for this purpose.

3. Use for risky speculative operations of money funds in bigger volume, than you presume to lose as a result of gamble.

Further Gram explains that on our conservative views, each nonprofessional who is engaged in margined operations, should realize that he is engaged in gamble, and the obligation of its broker consists in prompting it.

And everyone who acquires so-called “hot” share issues or performs similar operations also speculates. Gamble is always captivating and you can feel huge pleasure leaving in game with a head. Quite probably that the majority of speculators, pushing the luck, believe that stars on their party and consequently don’t pay attention to a safety margin. The speculator feels that there has come favorable time for purchasing, or that it is better than its capability, than at other market makers, or that its adviser or system of game is reliable.

But such claims are very unpersuasive, writes Gram. Speculators rely on the value judgment which has been not confirmed with obvious experience or convincing reasoning.

It is very reasonable that government, despite this crisis is not abandoning to assist small businesses. And small business grants can be a real helper today.

But, of course, you should remember that today the fight for small business grants as well as for other kinds of grants has become more fierce. This is logical – more businesses need them. So before you start your battle for the small business grants, please make sure to visit this blog for more
details about grant industry.

Tags: , ,

Leave a Reply