Investment is an activity that is engaged in by people who have savings, i.e.

investments are made from savings, or in other words, people invest their savings in different assets depending on their risk and return. Investment can be either marketable as well as non marketable securities Investment is the employment of funds with the aim of getting returns . In financial sense, It is the commitment of funds which have been saved from current consumption with the hope that some benefits will be received in the near future in the form of interest ,premiums, dividends, pension benefits or appreciation in the value of their capital.

 In the economic sense, investment means the net addition to the economys capital stock which consists of goods and services that are used in the production of other goods and services. Investment in this sense implies the formation of new and productive capital in the form of new constructions, plant and machinery, inventories , etc. Such investments generate physical assets. Thus , it a reward for waiting for money .

a) Individual investorsIndividual investors are large in number but their investable resources are comparatively smaller they lack skills to carry out extensive evaluation and analysis before investing. b) Institutional investorsInstitutional investors are the organizations with surplus funds who engage in investment activities . E.g. Mutual funds , banking , non- banking companies , insurances companies. They invest in profitable avenues.

 Speculation is usually a short run phenomenal. A speculation usually involves the purchase of a saleable asset in hope of making a quick profit from an increase in the price of an asset which is expected to occur within few weeks or month. A speculator assumes high risk often without regards for the safety of his invested principle, to achieve large capital gains. Speculation is engaged in buying low and selling at a high price. A speculation in stock market is an inspiration to crores of investors and there is no stock market without it is based on passed experience. A persons anticipation makes him invest in these avenues thinking that the prices will rise in the future.

 It is a courageous and costly decision . Success in speculation requires highly specialized and talented knowledge but no speculation can win all the time. No investor ever becomes wealthy without speculating in something. Speculative activity adds to market liquidity .

a) BullA bull buys shares in the expectation of selling them at a high price in the future. b) BearA bear buys shares is the expectation of a fall in price with the intention of buying the share at a lower price at a future date. c) Lame duck A lame duck is a bear speculator he finds it difficult to meet his commitments and struggles like a lame duck this happens because of non availability of securities in the market which he has , agreed to sell and at the same time , the other party is not willing to postpone the transaction. d) StageA stock market operator who is much more cautious in his dealings compared to bull and bear . A stag neither buys or sells securities but merely applies for shares of a new company as if he was a genuine investor.

Investor
1. Planning Horizon
An Investor has a relatively longer planning horizon (at least 1yr).

Speculator
A Speculator has a very short planning horizon.(few days /few months).

2. Risk
An Investor is a low or a moderate risk taker. A Speculator always takes high risk.

3. Return Expectation
An Investor seeks a moderate or low rate of return which depends on the amount of risk. A Speculator looks for a high rate of return in exchange for the high risk borne by him.

4. Basis for decisions

An Investor attaches greater significance to fundamental factors and attempts a careful evaluation of the prospects of the firm. A Speculator relies more on market tips, technical charts, price movements ,inside dope and market psychology

5. Leverage
Investor uses his own funds . Speculator uses his own funds and heavily depends upon borrowed funds.

Investor
6. Safety
Investors are careful while selecting the securities (consider safety ).

Speculator
Speculators focuses more on returns than safety.

7. Sources Of Income
Earnings of enterprises . Change in market prices.

8. Physiological Attitude Of Participants

Cautious , calculative and conservative . Daring, risk taker and careless.

9. Stability Of Income
An investor purchases security by proper investigation and analysis with an aim to receive good and stable return for a longer period of time. Speculators are less interested in consistent returns and are more in earning very large returns. Hence, they receive a return that is uncertain and erratic.

10. Marketability
Investments can either be marketable or nonmarketable securities Only marketable securities

11. Types Of Contract

Investor is a creditor of the investment . Speculator is the owner of the speculation.

Investor
Investment is a scientific analysis of intrinsic worth .

Speculator
12. Reasons for purchase
It is unscientific analysis of scientific worth.

13. Delivery
A genuine investor makes a immediate settlement after the conclusion of the trade. A speculator does not make any immediate settlement of the trade i.e. making payment or receiving payment.

14.Stress level
True investors can sleep soundly at night since they are for a long term they have a fairly good idea of their loss and gain before hand and can forget about short term movements and ignore the market most of the time. Speculation is likely to lead to many sleepless nights and anxious days. Since its result is uncertain the speculator will have to be always on the alert to take the necessary quick action to catch the right moment.

15. Result
Over a long period of time, true investment tends to produce a positive result as it produces much higher return than fixed deposit or inflation. Speculation is not based on anything concrete, its result is not at all predictable. Speculation can occasionally produce very high gains just as it can produce very high losses.

 Imagine you have $100,000 in cash. It is your sole asset. You decide to buy 5,000 shares of General Electric at $20 per share. You wake up tomorrow and the stock has fallen to $15 despite no fundamental shift in the long-term fortunes of the business. If you are a speculator, you are probably miserable. You think you have lost $25,000 because the portfolio has a market value of only $75,000. As an investor, your only concern is whether or not the companys long-term earnings, and the $850 in cash you receive every 3 months, grows at a rate in excess of inflation so your are getting more purchasing power over time. You keep an eye on the growth-adjusted earnings yield of your business stakes relative to the yield on the 30-year Treasury to make sure nothing gets out of hand, think about the long-term competitive position of your holdings (you dont want to own a horse and buggy manufacturer when the automobile comes on the scene), and make periodic, infrequent adjustments to control your risk.

 It has been found time and again that greedy market speculators use both legal and illegal means to make quick money during a bull run. It has been found that Every boom in Indian market has finally ended in a scam. Harshad Mehta and Ketan Parekh triggered such scams in early 1990s and 2000. The 2003 -05 bullish streak in the stock market saw the emergence of dishonest speculators forcing shares in the quota set for retail investors. In the initial public offering of shares as specially does that are expected to appreciate totally which ended in a demat scam.

 A stock market needs both an investor as well as a speculator . Speculation should be taken in a legal sense which is enforceable by law and not in an illegal sense leading to scams and frauds.(e.g. Demat scam , Harshad Mehta scam). A speculator has to keep a daily watch because of which he gets scared if there is a down fall in the prices. Where as , an investor is a person who does not worry about the current price as he knows that if there is a downfall then the loss will be covered in the future.

PRESENTED BY TANVI SHAH-7901 SAVIO A. CARDOZ -7902