GuruFocus Updates 8 June 2010 Featured No Comment

By Valuehuntr. One of the disastrous consequences of the New Era madness in Wall Street has been the disappearance of the former clean-cut distinctions between investment and speculation in common stocks. Old-time investment, with its emphasis on book value and the past record, was shortsighted and naive, but it possessed the supreme virtue of moderation. Present-day “investment,” as practiced by investment trusts and everyone else, is not much more than an undisciplined wagering upon the future and as such logically indistinguishable from speculation.

Common stocks have one important characteristics and one important speculative characteristic. Their investment value and average market price tend to increase irregularly but persistently over the decades, as their net worth builds up through the reinvestment of undistributed earnings-incidentally, with no clear-cut plus or minus response to inflation. Read more » »