Actual investment is usually called "value investing", you purchase assets at a substantial discount to their intrinsic value and wait for the market to recognize that value. True value investing is rarely practiced on Wall Street because Wall Street is mostly about the latest fad and charging fat fees to the uninformed. And when Wall Street firms tout themselves as "Value" they are typically just buying low PE stocks, which isn't actual value investing at all.
The speculation-investing definitions where "investing" is defined as "value investing" is specific to the Graham-Dodd school of thought. These are not generally-accepted economic definitions. For example, Index investing isn't "investing" per Graham-Dodd.
> Study most successful speculators of or times and
> you will see certain patterns and common traits.
There's no one way to invest -- you have to find a way that works for you.
Last I checked, Renaissance Technologies and Vista Equity Partners outperform Buffett. RenTech is the opposite of a value investor and Vista does technology LBOs.
Having said that, I agree my comment was a bit hyperbolic. The truth is probably a bit less bleak.
There's no guarantee your investment will yield a reward but there's a better probability than gambling (let's just say better than 50/50 for that matter). An investment is putting money towards something that has a good probability of yielding a return, be it your education, renovating your house, a new car, shares in Coca Cola, or US government bonds.
Nothing about investing in stocks is speculation, at least in the theoretical sense. Businesses earn profits. If you buy shares in a business, you are entitled to a share of those profits. Obviously, this gains you money, and this money will (usually) not come at the cost of the business. So, you'll gain money due to dividends, and your investment won't lose money.
Investing in stocks is going to be, on average, a net gain for you. In theory. And mostly in practice, see for example the massive exponential gains in the S&P 500.
There's a lot more to things. For example, sometimes businesses fail and you'll have lost all your money. And on the flip side, maybe a business will grow enormously. But this just adds noise to the data, it doesn't change the fact that, on average, you should make money on stocks in the long-term.
If you just buy a total market index fund, you're making a bet with a high expected value. That's not "speculation" in the same sense of going to a casino and playing blackjack or buying an asset which has no fundamental reason to rise in value (like precious metals).
So, I think it's misleading to call investing "speculation". It gives off the wrong vibes, since the way most people understand the word it makes it sounds like investing is super risky. (And yes, there's some risk, don't get me wrong, but not in the sense that it's a coin flip like many people think.)
I think bonds are considered investment although to the price sell them before term fluctuates.
Correlation!=causation
There absolutely is investment, consider the rise of socially-motivated ETFs. You can buy an index in:
- green power ($ICLN)
- smallcap biotech ($PSCH) (admittedly this is also used for speculation)
- boardroom diversity ($SHE)
- LGBT workforce ($EQLT)