Investor vs Speculator
The investor must recognize the existence of a speculative factor in their common-stock holdings, and keep this components within minor limits.
The defensive investor must confine himself to the shares of important companies with a long record of profitable operations and in strong financial condition.
- Always thoroughly analyse a company, and the soundness of the underlying businesses, before buying its stock.
- Deliberate protect yourself against serious losses
- aspire to “adequate”, not extraordinary performance
Mild inflation allows companies to pass the increased costs of their own raw materials on to customers, but high inflation wreaks havoc-forcing customers to slash their purchases, depressing activity throughout the economy.
To guard against inflation, a common advice is to buy stocks, but in truth stocks failed to keep up with inflation about one-fifth of the time.
To combat inflation, additionally look into REITs, and government bonds.