Investment vs speculation!

Why do you suppose the brokers on the floor of the New York Stock Exchange always cheer at the sound of the closing bell-no matter what the market did that day? Because whenever you trade, they make money-whether you did or not. By speculating instead of investing, you lower your own odds of building wealth and raise someone else's.
Graham's definition of investing could not be clearer: " An investment operation is one which, upon thorough analysis, promises safety of principal and an adequate return." Note that investing, according to Graham, consists equally of three elements:

• You must thoroughly analyze a company, and the soundness of its underlying businesses, before you buy its stock;
• you must deliberately protect yourself against serious losses;
• you must aspire to " adequate', not extraordinary, performance.

An investor calculates what a stock is worth, based on the value of its businesses. A speculator gambles that a stock will go up in price because somebody else will pay even more for it. A Graham once put it, investors judge " the market price by established standards of value," while speculators " base [their] standards of value upon the market price." For a speculator, the incessant stream of stock quotes is like oxygen; cut it off and he dies. For an investor, what Graham called " quotational" values matter much less. Graham urges you to invest only if you would be comfortable owning a stock even if you had no way of knowing its daily share price. 


Like casino gambling or betting on the horses, speculating in the market can be exciting or even rewarding ( if you happen to get lucky). But it is the worst imaginable way to build wealth. That's because Wall Street like Las  Vegas or the racetrack, has calibrated the odds so that the house always prevails, in the end, against everyone who tried to beat the house at its own speculative game. 
On the other hand, investing is an unique kind of casino-one where you cannot lose in the end, so long as you play by the rules that put the odds squarely in your favor. People who invest make money for themselves; people who speculate make money for their brokers. And that, in turn, is why Wall Street perennially downplays the durable virtues of investing and hypes the gaudy appeal of speculation.


The Intelligent Investor, Chapter 1 " Investment vs speculation.", Commentary by Jason Zweig.