When we hear the word “speculation” the conventional wisdom is that “risk” is inherent and significant. However, when we hear the word “invest” the conventional wisdom does not sound the same alarm bells. This is our cultural bias at work.

Many have faith in “the system.” Others feel “it’s risky,” putting monies into anything not in their control.

I suspect the difference is an outlook based upon input. If the main investing/speculation criteria is lack of work, then a low ROR is acceptable. If the main criteria is high ROR, then high risk is tolerated.

However, any high ROR with low risk entails a hands on approach. If we are willing to do more than open a daily newspaper and look at a stock number, then we often can make significant sums. Buffet said, “Pick your basket and put all your eggs into it.”

If a return is there 99.9% of the time, then my personal risk levels would tell me it is not speculation, however, technically the .1% failure would say it still qualifies as speculation.

So when i used the term ‘speculation’ above i used it generally (which i should not have) to refer to high risk scenarios.