Speculation versus Investing: an interesting historical perspective.

I finished reading another chapter in my latest book on dividend stocks investing and the book revealed another revelation. It would appear that all stocks use to pay a dividend and not paying a dividend would mean people didn’t think of the stock as an investment, but instead thought of it as gambling.

This thought caused me to pause for a moment and think this through. I was taught in economics class that “assets” are things which appreciate in value. And that “performing” “assets” not only appreciate in value but also pay me income.
For example, a rental home where the rent exceeded the mortgage payment, so I made a little income every month. It is an assets and it pays me money, so it is a performing asset.

Sometimes you have to get back to basics to provide yourself clarity of purpose when your drowning in information.

It appears that stocks were at one time called “investment grade” only if the stock had established a lengthy track record of steady price appreciation “and” regular dividend payment on a quarterly basis. These stocks were called “investments” and the term was carefully applied. This was in contrast to “speculative” which was defined as stocks with no guarantee of appreciation in value and paying no dividend. It’s entire value lay in the hope that it would gain in value and the company would be successful.
This was not considered an investment, it was considered gambling. But the name for it in polite company was a speculative investment.

Oddly enough many of today’s hot stocks are not really investments but speculation. These stocks make money for the people raising money through initial offerings and those who sell them. After that the brokerages continue to profit by having their clients buy and sell these speculative assets, while dangling dreams off buying shares of the next Net-flicks or the Microsoft in front of investors, whose total capitol shrinks each quarter. Contrast that to buying older, established stocks with a proven record of appreciation and dividend paying. A sure way to both grow your portfolio and your passive income.

Knowledge is power, that tile of power creates wealth and wealth is freedom from the 9-5 grind, trading time, the currency of life for fiat.

Free your self.

Written by Shortsegments. ✍🏼

Knowledge can be used to create wealth.
***Wealth creates or permits freedom to live your life your way.
Stay thirsty for knowledge my friend.

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