The Wall Street bullies make most of their money when investors speculate. The more they trade the more the bullies make money. The markets are far too efficient to successfully speculate. Those that make money in the short term can attribute it too luck and not skill. Remember the stock markets are random and unpredictable. Investors need to focus on the long term. Most if not all should fire their broker and hire an investor coach.

If you use leverage, you’re a speculator . Leverage is a rattlesnake with a head on each end. When prices are rising nothing magnifies returns like leverage. When prices are declining nothing will ruin you quicker than leverage—except leverage coupled with under-diversification. If you invest for short-term gain, you’re a speculator . Historically, stocks have been good long-term investments. Over the long term, a growing economy creates greater profits for companies and higher dividends and stock prices for shareholders. But investors must be patient. The global economy is cyclical and repeatedly moves through a series of expansions and contractions. Get used to it.

If you scour the media or the Internet for market-beating investment ideas, you’re a speculator . You’re kidding yourself if you think that you can make money acting on public information—it’s already factored into prices. Most media types giving investment advice are journalists or self promoters—hardly good sources for the kind of guidance investors desperately need.

If you invest in an asset because it has performed well in the past, you’re a speculator . Past performance tells us nothing about future returns; as I’m sure you know by now.

Many investors believe they can substitute a disciplined savings strategy and prudent portfolio with speculating. This does not work and will lead to very disappointing results.

Please comment or call to discuss how this affects you and your family.