105 - Investing vs Speculation vs Gambling

Mental Models discussed in this podcast: Investing Speculation Gambling Please review and rate the podcast If you enjoyed this podcast and found it helpful, please consider leaving me a rating and review. Your feedback helps me to improve the podcast and grow the show's audience.  Follow me on Twitter and YouTube Twitter Handle: @TreyHenninger YouTube Channel: DIY Investing Support the Podcast on Patreon This is a podcast supported by listeners like you. If you'd like to support this podcast and help me to continue creating great investing content, please consider becoming a Patron at DIYInvesting.org/Patron. Show Outline The full show notes for this episode are available at https://www.diyinvesting.org/Episode105 Definition of an Investment An investment meets all 5 conditions: Utilizes a Margin of Safety Provides an Adequate Return (>10% for me) The 10% hurdle is met solely on a fundamental cash flow basis Is a Positive-Sum Game Bounded by a specific range of prices and terms Any investment operation that fails to meet all five conditions is either speculation or gambling.  Gambling is both a negative-sum game or an operation with a negative expected value.  References Based on this Twitter Thread I made: https://twitter.com/TreyHenninger/status/1336004138061209604?s=20 Which was a rebuttal of this thread by @10kdiver: https://twitter.com/10kdiver/status/1335267196625244162?s=20 Previous Podcast Episodes cited: Episode 30 - GameStop Post-Mortem Episode 95 - How to build conviction (FAQ) Good source of discussion on Margin of Safety Episode 23 - What's a good discount rate? Episode 31 - Buying Stocks is not a zero-sum game Episode 32 - Shorting Stocks is a negative-sum game