Are You an Investor or Speculator?

22 April 2018

Are you a stock market investor or speculator? Both investors and speculators can make money on the stock market however the level of risk taken is different. Investors primarily focus on the financial analysis of the company and purchase stocks based on perceived good medium to long-term value, this approach has less risk. However, speculators try to beat the market by timing it, with little, if any, financial analysis of the company. For speculators the aim is to purchase ‘hot stocks’ and sell them just before the prices fall significantly; this approach is more risky.

Instructions: Please take the quiz below to determine your approach to investing. Determine if you are an investor or a speculator. Assign a number between 1 and 5 with 1 being the least like you and 5, most like you; then total your score.

CHARACTERISTICS OF INVESTORS	Rating (1-5)
I have a financial goal and an investment strategy. The stocks I choose, and the amount I invest, are related to my goal/s, timeline and the amount of risk I can afford to take.
I examine the company’s financials and/or analysts’ views to determine whether the current price is a buying opportunity.
I look for high quality companies, buy at a good price, and I am prepared to hold for the long-term (5 years or more).
I temper my risk by diversifying my stock holdings across industries rather than having all my money in one stock and/or industry.
My decision to sell a stock is based on either the long-term outlook of underperformance, or change in my investment strategy NOT a mere decrease in the price and/or because others are selling their stock holdings.
I do not watch the price change on a daily basis, and short-term price fluctuations do not scare me because I am focused on the long-term performance of the stock.
If the financial analysis shows that my stocks have great long-term potential but the prices have fallen below my original purchase price, rather than selling, I see as a great opportunity to purchase additional stocks.
TOTAL

Now see what your results mean by seeing the description of your total score below.
1–14: Your activities are extremely speculative. Unless you are an expert on technical analysis, you may be purchasing and selling your stocks at the wrong times and therefore making significant losses. A free JMMB Goal Planning Session will help you to determine the actual cost of your financial goals, timeline/s and your investment strategy to determine which stocks are the best match for you, at this time.

15-21: You display many speculative tendencies. JMMB can help you by managing your stock portfolio through our Income and Growth Unit Trust which earned 11.69% (April 20, 2017 to April 20, 2018)

22-28: You display largely investor tendencies but sometimes you go into speculative mode. With greater focus on your goal/s and excellent long- term stocks in your portfolio, you will be well on your way to making handsome long-term returns. JMMB can help you to select the best long-term stocks and or manage your portfolio through our Income and Growth Unit Trust.

29-35: You are an investor. Your determination of your stock portfolio is largely based on financial analysis and expert information. JMMB’s Moneyline is a great online tool for you to easily manage your own stock portfolio. You may even put in an order price along with the expiry date so you purchase and/or sell your stocks at a predetermined price. JMMB can also help you to select stocks with great long-term potential or manage your portfolio for you in our Income and Growth Unit Trust.

Do you want to invest in the stock market? Please give us a call on 998-5662. You may also visit our website at www.https://jm.jmmb.com/equity-research for stock picks and detailed analysis of stocks.

By: Michelle Sinclair-Doyley

Manager, Client Financial Education