All Things Financial Planning Blog

Are You an Investor or Speculator?


A Worthwhile Financial Market DiagnosisHow can you tell if you are you an investor or a speculator? Many casual investors buy stocks and assume they are investing, but in reality, they are actually speculating. True investing entails conducting a thorough analysis of a company, determining whether the current price is justified, deciding whether the stock would be a good addition to your portfolio, and repeating the process periodically; speculation is simply buying a stock because you think it’s a good company or you heard a good tip, but you really don’t know how the company makes money, who its competitors are, or in some cases, even what it does. Most people would say they are an investor, but unless you are employing the fundamental analysis discussed below, you may actually be a speculator.


Suppose you believe that the new Affordable Care Act will benefit pharmaceutical companies and you want to capitalize on that potential gain. In a top-down approach, you would first generate a list of all the publicly traded pharmaceutical companies. Then you would compare them among each other using that industry’s metric. If any of the companies are non-US companies, then you need to translate the company’s currency to the US dollar for an equal comparison. Some common comparison metrics include: profit margins, sales, market capitalization, market penetration, debt/equity, etc. In addition, each industry has its own unique metric. For example, airlines use (revenues per passenger miles) and hotels use (average daily rate). Once you have identified the best stock within your filtered list, then you can determine whether the stock price is cheap or expensive versus its competitors.


Suppose you are an avid Facebook user and want to invest in the stock. In a bottom-up approach, you would first obtain financial information for Facebook to understand how it makes money. What are its income sources: advertising, selling products, partnerships? How much of their income comes from each source? Who are its competitors and what do their numbers look like? Keep in mind, just because a company makes a ton of money, it still doesn’t make it a good investment. Facebook made $5 billion in 2012 while Microsoft made $74 billion in 2012, yet Facebook stock trades at almost 143 times the value of Microsoft.

Research Reports

Some investors prefer to rely on research reports prepared by prominent analysts at investment banks. One of the many lessons the recent financial crisis taught us is that investment banks have countless conflicts of interest. There is no shortage of headlines where an investment bank issued research reports where they also did investment banking for the company in question. Unless the research is truly independent and neither the analyst nor their firms have a vested interest in the companies they cover, their assessment of a company is tainted by their firm’s relationship with the company being reviewed.

As you can see, researching individual stocks is very labor intensive whether you use the top-down or bottom-up approach. The analysis doesn’t stop when you buy the stock, you must continue to monitor the company (not just the stock price) to ensure it still meets your criteria. It’s ok to invest in stocks, but investors must recognize that unless they conduct ongoing and thorough analysis, they are merely gambling.

Ara OghoorianAra Oghoorian, CFP®, CFA
Founder and President
ACap Asset Management
Los Angeles, CA

Author: Ara Oghoorian, CFA, CFP®

Ara Oghoorian, CFA, CFP®, is the founder and president of ACap Asset Management, Inc., a boutique wealth management firm located in Los Angeles, CA. ACap provides comprehensive investment management and financial planning services with a niche in advising physicians and medical professionals. Ara began his professional career 20 years ago at Wells Fargo Bank in Huntington Beach, CA piloting new supermarket banks. He then moved to San Francisco to obtain a degree in finance and worked full time at the Federal Reserve Bank. Ara spent nearly nine years there as a bank examiner where he audited U.S. banks, bank holding companies, and foreign institutions from Japan, Hong Kong, China, Korea, Taiwan, Philippines, United Kingdom and France. In 2005, Ara accepted a prestigious position with the US Department of the Treasury as the resident advisor to the Ministry of Finance and Economy in the Republic of Armenia. He was responsible for advising the top officials of the Republic of Armenia on how to transition from a centralized audit function to a decentralized system. Upon his return to the US, Ara worked for a wealth management firm in the Washington DC area advising and managing the personal wealth of CEOs from Fortune 500 companies. Ara has spent his entire career in finance and as a result, he has a firm grasp of financial markets, economics, and their interactions. He is a member of the CFA Institute, CFA Society of Los Angeles, Financial Planning Association of Los Angeles, NAPFA, and Toastmasters International. In addition to his work in finance, Ara also sits on the board of the World Children’s Transplant Fund where he also chairs the annual Global Partners’ Dinner. Ara is a frequent speaker at local medical schools, medical societies, professional organizations, and private businesses. He has a degree in finance from San Francisco State University, is a Commissioned Bank Examiner through the Federal Reserve Board of Governors, holds the Chartered Financial Analyst (CFA) designation, Certified Financial Planner designation, and holds the Series 65 license. Ara currently lives in Los Angeles with his wife and two sons.

40 thoughts on “Are You an Investor or Speculator?

  1. Hi Admin,

    I am Andrew Jackson. I am a financial writer and want to contribute a guest post for your blog :-blog.fpaforfinancialplanning .org and it will be only published on your blog.

    I will send my article as an attachment in the .txt or word format.

    Hope you would like my proposal and give me an opportunity.

    May I send my article?

    Best regards,
    Andrew Jackson
    Skype Name:a_jackson051

  2. Pingback: Oh No I Am a Speculator and Not an Investor! Another Reason To Go With Index Funds | Saving to Inve$t

  3. Greetings I am so delighted I found your web site, I really found
    you by accident, while I was browsing on Yahoo for something else, Nonetheless I am here now and would just like to
    say thanks a lot for a fantastic post and a all round thrilling blog (I also love the theme/design), I don’t have time to browse it all at the moment but I have bookmarked it and
    also included your RSS feeds, so when I have time I will be back to read more,
    Please do keep up the great b.

  4. It’s actually a cool and useful piece of info. I’m glad that you
    just shared this useful information with us. Please keep us up to date like this.
    Thank you for sharing.

  5. I’m really impressed along with your writing talents and also with the
    format to your blog. Is that this a paid subject matter or did you modify it your self?
    Either way stay up the excellent quality writing, it’s uncommon to look a great blog like this
    one today..

  6. ideas in finding wholesale low-cost nfl jerseys from china.
    wholesale jerseys

  7. Excellent beat ! I wish to apprentice while you amend your web site,
    how could i subscribe for a blog web site? The account helped me
    a acceptable deal. I had been a little bit acquainted
    of this your broadcast provided bright clear idea

  8. Thanks on your marveloujs posting! I truly enjoyed reading it, you could be a great
    author. I will always bookmark your blog and wwill eventually come back sometme soon.
    I want to encourage one to continue your great work, have a nice evening!

  9. Instead, it is made with a whiter wheat flour called albino wheat and is naturally
    whiter in clor than the normally used red wheat. You should visit your doctor iif you break out in hives or
    if your skin becomers red or flushed affter eating foods thatt
    contain wheat product. How’s it working so far, with
    over 34% of the population obese.

  10. Herbal pax vaporizer alternative Vaporizer Units The Best and the Cheapest
    Way for Avoiding SmokeVaporizers must be lauded ass to being the biggeest find of the century.
    Discover more of the negative PR repercussions & regulations of
    a cigarette.

  11. I am not certain the place you are getting your info, but great topic.
    I must spend a while finding out more or figuring out more.
    Thank you for wonderful info I was searching for this info for my mission.

  12. Maybe because we’re just not doing it enough. I hhad done this
    before and I do male enhancements really work didn’t really have a problem with his ereections after an accident is his level of self respect.
    I don’t even need to give any advice regarding your condition, as well
    as diabetes, pelvic surgery, sickle cell anemia, premature ejaculation and also increases
    the staying power.

  13. Body builders put their bodies through some major training and severely limited v3
    dieting. Campbell said that there may be
    some rise in depression and anxiety nevertheless the
    risk of suicide was very small.

    Anyone who may have lost a substantial amount of weight should be
    able to tell you such a large ordeal the full process could be at times.
    As the constituents are very natural, in order that it does not cause
    any unwanted side effects and damages to one’s body. here

  14. You should take part in a contest for one of the
    finest sites online. I’m going to highly recommend this web site!

  15. Often we hear experts on tv that report a particular stock
    is likely to soar and now is the time to acquire.
    She invites one to visit her site where she’s going to share a proven way to start an internet business.
    I have seen my share of scams, and have in fact done an excellent job avoiding being taken for a sucker
    and I’m here to share with you, Ameriplan is just not a scam.

  16. I have been exploring for a llittle bit for any high-quality
    articles orr weblog posts on this kind of space . Exploring
    inn Yahoo I ultimately stumbled upon thyis website.

    Reading this information So i’m glad to convey that I’ve
    a very good uncanny feeling I caqme upon just what I needed.
    I so mhch certainly will make sure to don?t omijt tthis site and
    provides it a glance regularly.

  17. If you want to increase your familiarity simply keep visiting this web page and be updated with the newest information posted here.

  18. Feel free to contact us any time.  Thank

  19. Nice post. I was checking constantly this blog and I’m impressed!
    Very helpful info specially the remaining phase 🙂
    I care for such information a lot. I used to be looking for this particular
    information for a long time. Thanks and good luck.

  20. If you are going for finest contents like I do, just pay a quick visit this site every day as it presents feature contents, thanks

  21. Basically place, Code – Key is aan uncomplicated to make use of tooll developed to
    unlock the mystery of why your vechicle Check Engine Light is on. PS3: Square, L2, R1, Triangle, Left, Square, L2, Right, XXbox
    360: X, LT, RB, Y,Left, X, LT, Right, A. Ownerss with regular financial status should really take this into consideration.

  22. Amazing! Its in fact remarkable article, I have got much clear idea concerning from this post.

  23. Who are its competitors and what do their numbers look like? Keep in mind, just because a company makes a ton of money seo singapore

  24. Suppose you believe that the new Affordable Care Act will benefit pharmaceutical companies and you want to capitalize on that potential gain.Howeveraccounting software

  25. How can you tell if you are you an investor or a speculator? Many casual investors buy stocks and assume they are investing, but in reality, they are actually speculating.It was politically embarrassing for Israel HCG drops

  26. Suppose you are an avid Facebook user and want to invest in the stock.Mahatma Gandhi led peaceful protests against British colonial rules in India. eye doctor portland

  27. Suppose you are an avid Facebook user and want to invest in the stock.itnesses in the Pussy Riot case claimed to have suffered spiritual harm from the band’s forty second “punk prayer” in a major cathedral.forskolin for weight loss

  28. The EarForce PX4 additionally states that it has Interference-free, Twin-Band Wi-Fi know-how” thanks to using both the 2.four GHz and 5 GHz vary.

  29. Suppose you are an avid Facebook user and want to invest in the stock.FM radio style hoaxes are meant to amuse listeners and aren’t political. Those of the Chaser are also meant to make people laughspartagen XT

  30. naturally like your web site however you have to take a look at the spelling
    on quite a few of your posts. A number of them are rife with spelling issues and I in finding it very troublesome to tell the reality on the
    other hand I’ll certainly come back again.

  31. Thanks for sharing this useful information with us. This blog has really touched many important points and issues that could provide a great deal.

  32. Suppose you are an avid Facebook user and want to invest in the stock.For exampleHay Day Cheats Tool APK – Diamonds

  33. I have read some just right stuff here. Certainly price
    bookmarking for revisiting. I surprise how much
    effort you place to create such a magnificent informative site.

  34. Thanks for sharing such a nice information. You really change my concept about investment. Most of the people think they are investor but actually are a speculating, because they never use to to do research about the company turnovers, revenues, profit margins, market capitalization, sales structures. They only buy stock of good company whose tips are good and thought they are investor.

    If any one is beginner in Investment market and wants tips feel free to visit

  35. A debt of gratitude is in order for sharing such a pleasant data. You truly change my idea about speculation. The vast majority of the general population think they are financial specialist however really are a guessing, in light of the fact that they never use to do research about the organization turnovers, incomes, overall revenues, market capitalization, deals structures. They just purchase load of good organization whose tips are great and thought they are financial specialist.
    I attempted MMF Solutions Malaysia’s KLSE Investment Tips and I create around 20% benefit month to month.

  36. Forte School of Music is providing Music Lessons howick Auckland , New Zealand. Forte School is best in Music , Singing , Guitar and Piano Classes. Contact us now 09 534 2223

  37. Thanks for sharing this interesting blog with us. My pleasure to being here on your blog. I wanna come back here for new post from your site.French legal translation Dubai

  38. There are a lot of blogs and articles out there on this topic, but you have acquired another side of the subject. This is reliable content and i gain a lot information from it. It is really wonderful blog and i will only say thanks to you for sharing it.Arabic legal translator Abu Dhabi

  39. Its really beneficial.Great to read.
    Thank you so much for your nice blog.

    If you are looking to apply for a bank/SBA loan, to obtain funding from private investors, to lease a space for your business or to avoid costly mistakes when starting or expanding your business, you would benefit immensely by obtaining a professional Business Plan(

  40. I have been exploring for a bit for any high-quality articles or blog posts
    in this sort of space . Exploring in Yahoo I
    ultimately stumbled upon this web site. Studying this information So i’m glad to convey that I’ve an incredibly
    good uncanny feeling I came upon exactly
    what I needed. I most for sure will make certain to don?t forget this web
    site and give it a glance on a constant basis.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s