Often when the market is discussed, most people, as well as the media, describe all market participants as "investors". This is a very loose term to describe those putting their funds into the financial markets.
Most market participants consider themselves "investors", but their actions are more indicative of a "speculator". At this high point in the market, it is very important that you clearly know your true nature. While this may sound like "splitting hairs", introspection into ourselves is critical to achieving our goals. It is imperative that we carefully evaluate our own actions to keep us on target toward our goals. After all, each one of use is highly subject to behavorial biases that can derail our best laid plans.
The number one item that each investor should pay close attention to is "protecting them from themselves"!
Being a value investor, I believe the common use of the word "investor" is clearly inappropriate to describe everyone who has risked their financial assets in the market.
Benjamin Graham, the father of value investing, has a very clear and precise definition of an investor . He defines it in his seminal book The Intelligent Investor as follows:
"What do we mean by "investor"? Throughout this book the term will be used in contradistinction to "speculator." As far back as 1934, in our textbook Securities Analysis, we attempted a precise formulation of the difference between the two, as follows" "An investment operation is one which, upon thorough analysis promises safety of principal and an adequate return. Operations not meeting these requirements are speculative."
At these high market levels, you must clearly understand if you are operating as an "investor" or a "speculator". You don't want to look back tomorrow after a significant loss and realize how you really were operating!
