It is hard to tell apart investing, speculating and gambling completely. To many investors, the three can overlap with one another.
Even Warren Buffett, the Oracle of Omaha, finds it tricky to define those terms.
“It’s like pornography,” he quipped, referring to how a word can be interpreted differently by different people.
But here is how Buffett looks at it:
According to Buffett, an investment operation is “one where you look to the asset itself to determine your decision to lay out some money now, to get some more money back later on”.
This can apply to apartments, stocks, farms, commodities, etc, and an investor looks at all of them with the above-mentioned intent.
However, Buffett also opines that the price or quote of the asset should not be a major concern of the investor.
This is understandable, considering that Buffett is known as a long-term value investor.