Are you a speculator or an investor?

This is an important question to ask oursleves as we experience the current market swings.

If we are investors, we are trying to make a profit over a long period of time. If we are speculating, we are trying to make money in a short period of time with high risk endeavors.

Most of the investors I know have been taking the current market losses in stride. They understand that the market is still positive for the year. They know that the market has been very positive over a 5, 10, and 20 year period.

Most investors have been very happy with their decision to invest in the stock market. I don't know too many investors who are thinking of getting out of the market due to the recent poor performance. In fact, many investors see the current losses as a buying opportunity.

Most of the speculators I know have been having a tough month. Many speculators who began investing recently are already thinking about getting out of the market. Their heavy losses this month have convinced them that playing the market is a fool's game where riches are not available.

So when you are deciding what to do in the current market situation, ask yourself if you are an investor or a speculator. If you are a speculator, realize your short term losses are a result of the high risk and short time frame you are working within. If you are an investor, learn from the current market and look for buying opportunities as the speculators (and a few investors) head for the exits in a panic of selling to cut their losses.

Here's the definitions from dictionary.com:

SPECULATING - to engage in any business transaction involving considerable risk or the chance of large gains, esp. to buy and sell commodities, stocks, etc., in the expectation of a quick or very large profit.

INVESTING - The act of committing money or capital to an endeavor (a business, project, real estate, etc.) with the expectation of obtaining an additional income or profit.