Talk:Investor

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I am making this a separate article. In one sense, the word "investor" merely means a party who makes investments. However, the word has taken on specific meanings and it is important in the world of business to understand the different types of parties who act as investors, as distinct from the nature or form of the investment. Wikidemo 19:50, 16 January 2007 (UTC)

"It is important to note that..."

This edit[1] appears a bit odd. The word "investor" is a broad term. The following dictionary definition is as good as any: "the purchase of a financial product or other item of value with an expectation of favorable future returns".[2] This article contains a list of different types of personal and organizational investors. That's an important concept, even if the article is very rudimentary: the activity of investing in order to accumulate capital (or achieve annuities, or hedge, diversify, or otherwise improve one's financial condition) is a fundamental one that underpins most of the world economy. Although there is a distinction to be made between investing in original Securities offerings and investing in subsequent secondary markets, placing capital in either of them is generally considered an investment. From the investor's point of view the distinction between buying a security directly from the issuer, and buying it from an intermediary or someone who has held it before, is relevant but not fundamental... in fact, it's the saleability in the secondary market that makes a security a security.

Indeed, the body of the article talks about investing in derivatives, stock markets, artwork, investment trusts, hedge funds, etc., none of which are necessarily direct investments in an enterprise. What you can say is that someone is only an investor in a particular company if they purchase an original issuance. But that's not what this article is about. A couple more technical points. It's not encyclopedic in tone to introduce something by saying "it is important to note". The presumption is that if it's in the encyclopedia it's important enough to note. Further, a citation to a book should include a specific reference to a passage in the book that supports the encyclopedia content in question, and if the source is challenged and behind a pay wall it's useful to include the direct quote in the citation. - Wikidemon (talk) 08:05, 4 December 2011 (UTC)

People in the secondary markets are NOT investors

I want to post the following and it was deleted. I was asked to discuss it here. What is incorrect about this post? "It is important to note that shareholders and bondholders are "investors" if and only if they are the original purchasers of the debt or equity. All others are in the secondary market. That is, while the secondary market indirectly supports the primary market, it does not contribute original capital to the issuing organization. Therefore, those in the secondary market are NOT investors. " — Preceding unsigned comment added by Sigiheri (talk • contribs) 19:03, 4 December 2011 (UTC)

See my comments above. This article about individuals and entities who place their money in property or a financial vehicle hoping for a return - the common meaning of "investor". The focus is not specifically the narrower group who finance companies by purchasing original issuances of stocks or bonds. That might be a viable article, but a different one. Secondary market investments (stock market, bond market, derivatives, hedge funds, real estate, reits, artwork, etc.) are normally considered investments."invest+in+the+secondary+market" - Wikidemon (talk) 20:20, 4 December 2011 (UTC)

I disagree. As it's currently defined, you cannot make a distinction between "speculator" , "gambler" and "investor". What is the distinction? — Preceding unsigned comment added by Sigiheri (talk • contribs) 20:59, 4 December 2011 (UTC)

I'm not sure that the abstract distinction between gamblers and investors is a germane one to make. A speculator is a type of investor"a+speculator+is+a+type+of+investor""speculator+is+considered+to+be+a+type+of+investor" but beyond that there are many different meanings. Most refer to investors who place money in instruments in which they are not directly involved, and that fluctuate with market prices beyond the control of the investor, e.g. someone who trades currency or who buys real estate that they are not operating or improving in hopes of a change in the market. Gambling is typically short term betting on random outcome, although colloquially any randomness of outcome is sometimes described as a gamble. Anyway, the breadth of the concept of investor is not really a matter of opinion. In common usage (in America, at least, I don't know about the rest of the English speaking world) an investor is someone who places their capital in something hoping for a future return - you can google that and find a wealth similar definitions, books on how to do it, scholarship on what it all means, etc. As I mention in the section above, that's a logical topic for an article because the act of investing money is a distinct and very important encyclopedic subject, focusing on the people making the investments. The act of funding organizations by purchasing their securities directly is another distinct encyclopedic subject, although the classification there is based on who receives the funds, not who buys them. - Wikidemon (talk) 21:32, 4 December 2011 (UTC)

First, I could not follow your links. Second, you said "an investor is someone who places their capital in something hoping for a future return." This is what a gambler does as well as a speculator. I gamble and I normally win, so I expect a return. Am I an investor? — Preceding unsigned comment added by Sigiheri (talk • contribs) 22:10, 4 December 2011 (UTC)

You can find a vast number of sources describing speculators, secondary market investors, etc., as types of investors / investment, and distinguishing between gambling and investing, if you use google. The question of gambling isn't terribly relevant to the issue at hand but no, if you play casino games or enter the lottery you are not investing as that is commonly understood. Of course you can come up with edge cases but that's not the point. - Wikidemon (talk) 00:05, 5 December 2011 (UTC)

Ok, let's avoid gambling and only compare INVESTOR to SPECULATOR. This is from Wikipedia on speculators: "... although the word "investment" is commonly used to mean any act of placing money in a financial vehicle with the intent of producing returns over a period of time, most ventured money—including funds placed in the world's stock markets—is technically not investment, but speculation." Please explain how your definition is consistent with this quote. — Preceding unsigned comment added by Sigiheri (talk • contribs) 00:20, 5 December 2011 (UTC)

It is not consistent. You may want to go over and correct that article, as that quote contradicts the vast majority of sources. Somebody is using a specialized definition that differs from the common usage in lay and financial circles. - Wikidemon (talk) 00:28, 5 December 2011 (UTC)

Okay, so you disagree with Wikipedia. Please explain the exact difference between INVESTOR and SPECULATOR. Both involve money for making profit. WHAT is the difference. (PS I've already asked this exact question, so I am hoping to get a response this time). — Preceding unsigned comment added by Sigiheri (talk • contribs) 01:00, 5 December 2011 (UTC)

I adjusted the article to reflect that your definition does not distinguish between those in the primary or secondary markets, or speculators. — Preceding unsigned comment added by Sigiheri (talk • contribs) 01:09, 5 December 2011 (UTC)

Sigiheri, your generally right about most in the secondary markets (most being speculators) not being investors although some of them are. Those long-term buy and hold guys that follow the warren buffet rule often only purchase securities for the dividend returns, and don't pay attention to the price change their whole lives. These individuals may purchase the shares on the exchange. Also, the fact that the person is not buying them in the primary IPO market doesn't make it distinct that they are an investor over someone in the secondary market. For instance at the IPO stage, the underwriter typically purchases wholesale a large amount of the issue, then sells it either to their clients or sells some on the exchange when the shares start trading. Those primary market holders often offload their shares to the public to make a quick speculation gain, therefore, those new buyers may be speculators or investors who might hold it forever, where speculators don't they want to TRADE it.

The guy was wrong who was saying Speculators are Investors. Completely false - speculators are the purest form of capitalists, they in fact rarely care about the underlying security. They only care about price fluctuation, and trying to profit off it. They could be speculating on cotton, rubber, pigs, crude oil, stocks, options, futures, SSF, butter, eggs, etc..it's irrelevant what the underlying is. SOME might be investors also, as in they are operating in dual roles, but the two roles are not the same.Danceking5 (talk) 08:58, 24 June 2012 (UTC)

I agree that speculators are not investors, but that one person can be both in different capacities.Sigiheri (talk) 10:01, 24 June 2012 (UTC)

References

Speculation

The assumption of risk in anticipation of gain but recognizing a higher than average possibility of loss. The term speculation implies that a business or investment risk can be analyzed and measured, and its distinction from the term Investment is one of degree of risk. It differs from gambling, which is based on random outcomes. There is nothing in the act of speculating or investing that suggests holding times, have anything to do with the difference in the degree of risk separating speculation from investing.

Speculation from 14c., "contemplation, consideration, contemplation, observation, to look at, view" (see scope). Disparaging sense of "mere conjecture" is recorded from 1570s. Meaning "buying and selling in search of profit from rise and fall of market value" is recorded from 1774. [3]

Scope sense of "distance the mind can reach, extent of view" first recorded c.1600. [4]

Investment 1590s, “act of putting on vestments, commercial sense is from 1610s, originally of the finances of the East India Company; general use is from 1740 in the general sense of “conversion of money to property in hopes of profit,” and by 1837 in the sense “amount of money so invested; property viewed as a vehicle for profit.” [5]

What is significant to note is the change from a passive to an active form of use. Specifically from a strict observer to one who contemplates what they observe then further to one who contemplates and acts on what they observe.

With these changes, the word as now commonly used, describes one who observes an object, event, or situation and takes some form of action with regard to the observed, all the while aware they may not know all the facts or factors regarding or affecting that which they observe. E.g. the financial speculator, one who understands and accepts he may not know all the facts or risks involved with a venture, yet chooses to invest his capital in the venture for the possibility of receiving greater capital in return.

-oo0(GoldTrader)0oo- (talk) 05:00, 2 February 2014 (UTC)

References

Accounting principles

Explain it to me as a beginner 192.145.174.142 (talk) 10:10, 12 September 2022 (UTC)

Wrong article; see Accounting standard. — voidxor 22:08, 18 September 2022 (UTC)