{"id":490,"date":"2023-12-19T18:51:35","date_gmt":"2023-12-19T18:51:35","guid":{"rendered":"https:\/\/pressbooks.ccconline.org\/accinvestments\/?post_type=chapter&#038;p=490"},"modified":"2023-12-19T18:52:04","modified_gmt":"2023-12-19T18:52:04","slug":"1-1-what-is-an-investment","status":"publish","type":"chapter","link":"https:\/\/pressbooks.ccconline.org\/accinvestments\/chapter\/1-1-what-is-an-investment\/","title":{"raw":"1.1: What Is an Investment?","rendered":"1.1: What Is an Investment?"},"content":{"raw":"<p class=\"lt-biz-79462\"><iframe id=\"iFrameResizer0\" title=\"Chapter 01 - Slides 01-14 - Introduction: What is an Investment?\" src=\"https:\/\/wonderprofessor.com\/123\/Chap01\/Chap01_Slides_01_to_14\/Chap01_Slides_01_to_14.html\" width=\"640\" height=\"480\" allowfullscreen=\"allowfullscreen\" data-mce-fragment=\"1\"><\/iframe><\/p>\r\n<p class=\"lt-biz-79462\"><a class=\"inline_disabled\" href=\"https:\/\/wonderprofessor.com\/123\/Chap01\/Chap01_Slides_01_to_14\/Chap01_Slides_01_to_14.html\" target=\"_blank\" rel=\"noopener\">Video<\/a>\u00a0-\u00a0<a class=\"inline_disabled\" href=\"https:\/\/wonderprofessor.com\/123\/Chap01\/Chap01_Slides_01_to_14\/Chap01_Slides_01_to_14.mp3\" target=\"_blank\" rel=\"noopener\">Audio<\/a>\u00a0-\u00a0<a class=\"inline_disabled\" title=\"https:\/\/wonderprofessor.com\/123\/Chap01\/Chap01_YouTube_01_14.html\" href=\"https:\/\/wonderprofessor.com\/123\/Chap01\/Chap01_YouTube_01_14.html\" target=\"_blank\" rel=\"noopener\">YouTube<\/a>\u00a0-\u00a0<a class=\"instructure_file_link inline_disabled\" href=\"https:\/\/docs.google.com\/presentation\/d\/1jvqzrOV6FJh37FwQD_tlNIrJvc8ENBfknKW9Zak5MU8\/\" target=\"_blank\" rel=\"noopener\">Presentation File<\/a>\u00a0-\u00a0<a class=\"link-https\" title=\"https:\/\/docs.google.com\/document\/d\/1-1D6tFwbN6KFDGIslhPX3x_gnEAw0sp3xJiNADR4p-I\/\" href=\"https:\/\/docs.google.com\/document\/d\/1-1D6tFwbN6KFDGIslhPX3x_gnEAw0sp3xJiNADR4p-I\/\" target=\"_blank\" rel=\"external noopener nofollow\">Study Guide<\/a><\/p>\r\n\r\n<blockquote>\r\n<p class=\"lt-biz-79462\"><em>\u201cIn investing money, the amount of\u00a0<\/em><\/p>\r\n\r\n<div class=\"glossarizer_replaced\" aria-expanded=\"false\">interest<em>\u00a0you want should depend upon on whether you want to eat well or sleep well.\u201d\r\n-- J. Kenfield Morley<\/em><\/div><\/blockquote>\r\n<p class=\"lt-biz-79462\">Welcome to Introduction to Investments. Do you want to be a successful investor? You can. You do not need any prior<\/p>\r\n\r\n<div class=\"glossarizer_replaced\" aria-expanded=\"false\">investment\u00a0experience to take this class. You don\u2019t have to be a genius or a technology whiz. There is no advanced math, only simple arithmetic that any 99\u00a2 calculator can perform, addition, subtraction, division, and multiplication. The concepts, techniques, and skills, while extensive at times, are not difficult. The research is relatively painless. As the famed investor,\u00a0<a class=\"link-https\" href=\"https:\/\/en.wikipedia.org\/wiki\/Warren_Buffett\" target=\"_blank\" rel=\"external noopener nofollow\"><u>Mr. Warren Buffett<\/u><\/a>, has been quoted as saying, \u201cInvesting is simple \u2026 but it ain\u2019t easy.\u201d What? Why? How? Mr. Buffett is referring to the fact that there are two parts to the world of investments. The simple part is the intellectual part, the cognitive part. Read, listen, watch, study the material, spend some time doing the research and the assignments, and you should find that the concepts, techniques, and skills are actually very straightforward. The \u201cain\u2019t easy\u201d part is the emotional part of investing. We will spend a great deal of time doing our best to help you learn techniques, tricks, and tips that should help you succeed with the emotional part, but again, as Mr. Buffett says, \u201cit ain\u2019t easy!\u201d<\/div>\r\n<p class=\"lt-biz-79462\"><a class=\"link-https\" href=\"https:\/\/en.wikipedia.org\/wiki\/John_Morley\" target=\"_blank\" rel=\"external noopener nofollow\"><u>Mr. J. Kenfield Morley<\/u><\/a>\u00a0encapsulates our predicament perfectly. \u201cIn investing money, the amount of<\/p>\r\n\r\n<div class=\"glossarizer_replaced\" aria-expanded=\"false\">interest\u00a0you want should depend upon on whether you want to eat well or sleep well.\u201d If we may be so bold as to suggest a better rendition of this timeless advice, we would ask Mr. Morley to substitute the word\u00a0<em>reward<\/em> for his choice of the word\u00a0interest.\u00a0Interest\u00a0is just one type of\u00a0investment\u00a0reward; there are others. Nevertheless, the meaning shines through brilliantly. As we are introduced to the many\u00a0investment\u00a0choices, we are going to see that some of the choices will help us eat well. Some others will allow us to sleep well. However, there aren\u2019t any choices that can do both. Take heart! We will learn some techniques that should allow us to eat reasonably well and sleep reasonably well but as we will say over and over and over again, \u201cThere ain\u2019t no guarantees!\u201d<\/div>\r\n<div id=\"section_1\" class=\"mt-section\">\r\n<h2 class=\"lt-biz-79462 editable\">Investing versus Speculating\/Trading<\/h2>\r\n<p class=\"lt-biz-79462\">We are going to introduce a distinction here that will run through our journey together. Do you want to be an investor or do you want to be a<\/p>\r\n\r\n<div class=\"glossarizer_replaced\" aria-expanded=\"false\">speculator, also known as a\u00a0trader? Becoming an investor is something that we can definitely help you with. You will learn the most important and most popular<\/div>\r\n<div class=\"glossarizer_replaced\" aria-expanded=\"false\">investment\u00a0alternatives. You will learn the types of rewards we can expect from each and the levels of risks that we will have to accept to receive these rewards. We will also cover some important techniques and skills to help us deal with these risks. We will learn that building wealth through investments is a<\/div>\r\n<div class=\"glossarizer_replaced\" aria-expanded=\"false\">long-term\u00a0process; it does not happen overnight. We can help you become a prudent,\u00a0long-term\u00a0investor. However, if you want to become a\u00a0speculator\u00a0or a\u00a0trader\u00a0and earn tremendous amounts of money quickly, then we are sorry to say that you will be very disappointed in this class. We are not able to help you to become a\u00a0speculator\u00a0or\u00a0trader. Our sincerest apologies. So let\u2019s get started. We start from the very beginning with a simple question: What is an\u00a0investment? There are many definitions available. Here is the definition we will use in our class:<\/div>\r\n<blockquote>\r\n<p class=\"lt-biz-79462\"><em>An\u00a0<\/em>investment<em>\u00a0is any vehicle into which resources can be placed with the expectation that it will generate positive\u00a0<\/em><\/p>\r\n\r\n<div class=\"glossarizer_replaced\" aria-expanded=\"false\">income<em>, or that its value will be preserved or increased, or both.<\/em><\/div><\/blockquote>\r\n<p class=\"lt-biz-79462\">For the vast majority of us, the resources placed will be dollars, typically from our work-related<\/p>\r\n\r\n<div class=\"glossarizer_replaced\" aria-expanded=\"false\">income. There are many\u00a0investment vehicles and, as mentioned, we will cover the most popular alternatives. We see that there are a few goals that we might seek with regard to our investments. One goal is to generate positive income, also known as cash flow. Another goal is to increase the value of our<\/div>\r\n<div class=\"glossarizer_replaced\" aria-expanded=\"false\">investment, also known as\u00a0capital appreciation. At the very least, we want to preserve the value of our investments over the long term. Lastly, we could also seek both goals of cash flow and\u00a0capital appreciation. As we introduce each\u00a0investment\u00a0alternative, we will discuss the goals associated with each\u00a0investment\u00a0alternative and the risks that each carries.<\/div>\r\n<p class=\"lt-biz-79462\">Here is another important definition that revisits our distinction of being an investor or a<\/p>\r\n\r\n<div class=\"glossarizer_replaced\" aria-expanded=\"false\">speculator\/trader:<\/div>\r\n<blockquote>\r\n<p class=\"lt-biz-79462\"><em>\u201cAn\u00a0<\/em>investment <em>operation is one which, upon thorough analysis, promises safety of\u00a0<\/em><\/p>\r\n\r\n<div class=\"glossarizer_replaced\" aria-expanded=\"false\">principal<em>\u00a0and a satisfactory return. Operations not meeting these requirements are speculative.\u201d \u2013 Benjamin Graham<\/em><\/div><\/blockquote>\r\n<p class=\"lt-biz-79462\">This definition, Dear Readers, is very near and dear to Your Humble Author\u2019s heart. This quote is from\u00a0<a class=\"link-https\" href=\"https:\/\/www.google.com\/search?q=the+intelligent+investor&amp;sxsrf=ALeKk01hksHhdDOiqjs_57wapSz3uW28Mw%3A1624812366085&amp;source=hp&amp;ei=TqvYYM6vArHE0PEPi6OhiAY&amp;iflsig=AINFCbYAAAAAYNi5XlydBvbVYkxs5vfCgVjK1MKMVEFY&amp;gs_ssp=eJzj4tTP1TcwrywrqjRg9JIoyUhVyMwrSc3JyUxPzSsBsstSi0vyiwDqIw1N&amp;oq=the+&amp;gs_lcp=Cgdnd3Mtd2l6EAEYADIHCC4QJxCTAjIECC4QJzIECCMQJzIECAAQQzIECC4QQzIECAAQQzIECAAQQzIECC4QQzIECC4QQzIECAAQQ1CsBFj1B2CoG2gAcAB4AIABlwGIAbcEkgEDMC40mAEAoAEBqgEHZ3dzLXdpeg&amp;sclient=gws-wiz\" target=\"_blank\" rel=\"external noopener nofollow\"><u><em>The Intelligent Investor<\/em><\/u><\/a>, written by\u00a0<a class=\"link-https\" href=\"https:\/\/en.wikipedia.org\/wiki\/Benjamin_Graham\" target=\"_blank\" rel=\"external noopener nofollow\"><u>Mr. Benjamin Graham<\/u><\/a>. Mr. Graham was Mr. Warren Buffett\u2019s teacher and mentor. Eventually you will want to read\u00a0<em>The Intelligent Investor<\/em>. (Don\u2019t read it as your first book! There are better books to read as your first book on investing. Please see the\u00a0<a class=\"link-https\" href=\"https:\/\/docs.google.com\/document\/d\/1UMe6PZ9-dRhlRQoSBPN2hTnR8QIgWFb7Fxv0EW1ZXcY\/\" target=\"_blank\" rel=\"external noopener nofollow\"><u>Bibliography<\/u><\/a>\u00a0for which books you should read first.) We will return again and again to this definition. If nothing else, we want you to understand the difference between prudent investing for the long term and speculating\/trading in the short term.<\/p>\r\n<p class=\"lt-biz-79462\">Mr. Buffett is famous for boiling down Mr. Graham\u2019s concepts into very simple sayings. To illustrate this concept, Mr. Buffett famously said, \u201cRule #1: Don\u2019t lose money. Rule #2: Never forget Rule #1.\u201d Although we will see that investment\u00a0values bounce up and down all the time, if you do your research and choose prudent,<\/p>\r\n\r\n<div class=\"glossarizer_replaced\" aria-expanded=\"false\">long-term\u00a0investments that have done well over time and should continue to do well into the future \u2012 and you don\u2019t panic when the markets fall \u2012 you won\u2019t lose money in the long term<sup>*<\/sup>. You won\u2019t be a\u00a0speculator\/trader. You will be an investor.<\/div>\r\n<p class=\"lt-biz-79462\">We will now discuss various characteristics and attributes of the major investment\u00a0alternatives.<\/p>\r\n<p class=\"lt-biz-79462\"><sup>*<\/sup><em>Disclaimer<\/em>: Please note that\u00a0investment\u00a0success is not guaranteed. If technologically based civilization cracks, falls, and dissolves into a pool of tears, then all bets are off. Of course, if that happens, you won't be worrying about your investments. You'll be joining the teeming masses digging for beetle grubs and boiling bark for dinner. Personally, I don't believe this is going to happen any time soon. I am very optimistic. Failure is not an option. But the truth is that nobody knows what the future will bring. Oh, well.<\/p>\r\n<p class=\"lt-biz-79462\">We will now discuss various characteristics and attributes of the major investment\u00a0alternatives.<\/p>\r\n\r\n<\/div>\r\n<footer class=\"mt-content-footer\">\r\n\r\n<hr class=\"autoattribution-divider\" \/>\r\n\r\n<div class=\"autoattribution\">\r\n\r\nThis page titled\u00a0<a class=\"internal mt-self-link\" href=\"https:\/\/biz.libretexts.org\/Bookshelves\/Finance\/Introduction_to_Investments_(Paiano)\/01%3A_Chapter_1\/01%3A_Introduction_Overview_and_Risk_versus_Return\/1.01%3A_What_Is_an_Investment\" target=\"_blank\" rel=\"internal noopener\">1.1: What Is an\u00a0<\/a>Investment<a class=\"internal mt-self-link\" href=\"https:\/\/biz.libretexts.org\/Bookshelves\/Finance\/Introduction_to_Investments_(Paiano)\/01%3A_Chapter_1\/01%3A_Introduction_Overview_and_Risk_versus_Return\/1.01%3A_What_Is_an_Investment\" target=\"_blank\" rel=\"internal noopener\">?<\/a>\u00a0is shared under a\u00a0<a href=\"https:\/\/creativecommons.org\/licenses\/by-nc-sa\/4.0\" target=\"_blank\" rel=\"nofollow noopener\">CC BY-NC-SA 4.0<\/a>\u00a0license and was authored, remixed, and\/or curated by\u00a0<a href=\"https:\/\/wonderprofessor.com\/\" target=\"_blank\" rel=\"nofollow noopener\">Frank Paiano<\/a>.\r\n\r\n<\/div>\r\n<\/footer>","rendered":"<p class=\"lt-biz-79462\"><iframe loading=\"lazy\" id=\"iFrameResizer0\" title=\"Chapter 01 - Slides 01-14 - Introduction: What is an Investment?\" src=\"https:\/\/wonderprofessor.com\/123\/Chap01\/Chap01_Slides_01_to_14\/Chap01_Slides_01_to_14.html\" width=\"640\" height=\"480\" allowfullscreen=\"allowfullscreen\" data-mce-fragment=\"1\"><\/iframe><\/p>\n<p class=\"lt-biz-79462\"><a class=\"inline_disabled\" href=\"https:\/\/wonderprofessor.com\/123\/Chap01\/Chap01_Slides_01_to_14\/Chap01_Slides_01_to_14.html\" target=\"_blank\" rel=\"noopener\">Video<\/a>\u00a0&#8211;\u00a0<a class=\"inline_disabled\" href=\"https:\/\/wonderprofessor.com\/123\/Chap01\/Chap01_Slides_01_to_14\/Chap01_Slides_01_to_14.mp3\" target=\"_blank\" rel=\"noopener\">Audio<\/a>\u00a0&#8211;\u00a0<a class=\"inline_disabled\" title=\"https:\/\/wonderprofessor.com\/123\/Chap01\/Chap01_YouTube_01_14.html\" href=\"https:\/\/wonderprofessor.com\/123\/Chap01\/Chap01_YouTube_01_14.html\" target=\"_blank\" rel=\"noopener\">YouTube<\/a>\u00a0&#8211;\u00a0<a class=\"instructure_file_link inline_disabled\" href=\"https:\/\/docs.google.com\/presentation\/d\/1jvqzrOV6FJh37FwQD_tlNIrJvc8ENBfknKW9Zak5MU8\/\" target=\"_blank\" rel=\"noopener\">Presentation File<\/a>\u00a0&#8211;\u00a0<a class=\"link-https\" title=\"https:\/\/docs.google.com\/document\/d\/1-1D6tFwbN6KFDGIslhPX3x_gnEAw0sp3xJiNADR4p-I\/\" href=\"https:\/\/docs.google.com\/document\/d\/1-1D6tFwbN6KFDGIslhPX3x_gnEAw0sp3xJiNADR4p-I\/\" target=\"_blank\" rel=\"external noopener nofollow\">Study Guide<\/a><\/p>\n<blockquote>\n<p class=\"lt-biz-79462\"><em>\u201cIn investing money, the amount of\u00a0<\/em><\/p>\n<div class=\"glossarizer_replaced\" aria-expanded=\"false\">interest<em>\u00a0you want should depend upon on whether you want to eat well or sleep well.\u201d<br \/>\n&#8212; J. Kenfield Morley<\/em><\/div>\n<\/blockquote>\n<p class=\"lt-biz-79462\">Welcome to Introduction to Investments. Do you want to be a successful investor? You can. You do not need any prior<\/p>\n<div class=\"glossarizer_replaced\" aria-expanded=\"false\">investment\u00a0experience to take this class. You don\u2019t have to be a genius or a technology whiz. There is no advanced math, only simple arithmetic that any 99\u00a2 calculator can perform, addition, subtraction, division, and multiplication. The concepts, techniques, and skills, while extensive at times, are not difficult. The research is relatively painless. As the famed investor,\u00a0<a class=\"link-https\" href=\"https:\/\/en.wikipedia.org\/wiki\/Warren_Buffett\" target=\"_blank\" rel=\"external noopener nofollow\"><u>Mr. Warren Buffett<\/u><\/a>, has been quoted as saying, \u201cInvesting is simple \u2026 but it ain\u2019t easy.\u201d What? Why? How? Mr. Buffett is referring to the fact that there are two parts to the world of investments. The simple part is the intellectual part, the cognitive part. Read, listen, watch, study the material, spend some time doing the research and the assignments, and you should find that the concepts, techniques, and skills are actually very straightforward. The \u201cain\u2019t easy\u201d part is the emotional part of investing. We will spend a great deal of time doing our best to help you learn techniques, tricks, and tips that should help you succeed with the emotional part, but again, as Mr. Buffett says, \u201cit ain\u2019t easy!\u201d<\/div>\n<p class=\"lt-biz-79462\"><a class=\"link-https\" href=\"https:\/\/en.wikipedia.org\/wiki\/John_Morley\" target=\"_blank\" rel=\"external noopener nofollow\"><u>Mr. J. Kenfield Morley<\/u><\/a>\u00a0encapsulates our predicament perfectly. \u201cIn investing money, the amount of<\/p>\n<div class=\"glossarizer_replaced\" aria-expanded=\"false\">interest\u00a0you want should depend upon on whether you want to eat well or sleep well.\u201d If we may be so bold as to suggest a better rendition of this timeless advice, we would ask Mr. Morley to substitute the word\u00a0<em>reward<\/em> for his choice of the word\u00a0interest.\u00a0Interest\u00a0is just one type of\u00a0investment\u00a0reward; there are others. Nevertheless, the meaning shines through brilliantly. As we are introduced to the many\u00a0investment\u00a0choices, we are going to see that some of the choices will help us eat well. Some others will allow us to sleep well. However, there aren\u2019t any choices that can do both. Take heart! We will learn some techniques that should allow us to eat reasonably well and sleep reasonably well but as we will say over and over and over again, \u201cThere ain\u2019t no guarantees!\u201d<\/div>\n<div id=\"section_1\" class=\"mt-section\">\n<h2 class=\"lt-biz-79462 editable\">Investing versus Speculating\/Trading<\/h2>\n<p class=\"lt-biz-79462\">We are going to introduce a distinction here that will run through our journey together. Do you want to be an investor or do you want to be a<\/p>\n<div class=\"glossarizer_replaced\" aria-expanded=\"false\">speculator, also known as a\u00a0trader? Becoming an investor is something that we can definitely help you with. You will learn the most important and most popular<\/div>\n<div class=\"glossarizer_replaced\" aria-expanded=\"false\">investment\u00a0alternatives. You will learn the types of rewards we can expect from each and the levels of risks that we will have to accept to receive these rewards. We will also cover some important techniques and skills to help us deal with these risks. We will learn that building wealth through investments is a<\/div>\n<div class=\"glossarizer_replaced\" aria-expanded=\"false\">long-term\u00a0process; it does not happen overnight. We can help you become a prudent,\u00a0long-term\u00a0investor. However, if you want to become a\u00a0speculator\u00a0or a\u00a0trader\u00a0and earn tremendous amounts of money quickly, then we are sorry to say that you will be very disappointed in this class. We are not able to help you to become a\u00a0speculator\u00a0or\u00a0trader. Our sincerest apologies. So let\u2019s get started. We start from the very beginning with a simple question: What is an\u00a0investment? There are many definitions available. Here is the definition we will use in our class:<\/div>\n<blockquote>\n<p class=\"lt-biz-79462\"><em>An\u00a0<\/em>investment<em>\u00a0is any vehicle into which resources can be placed with the expectation that it will generate positive\u00a0<\/em><\/p>\n<div class=\"glossarizer_replaced\" aria-expanded=\"false\">income<em>, or that its value will be preserved or increased, or both.<\/em><\/div>\n<\/blockquote>\n<p class=\"lt-biz-79462\">For the vast majority of us, the resources placed will be dollars, typically from our work-related<\/p>\n<div class=\"glossarizer_replaced\" aria-expanded=\"false\">income. There are many\u00a0investment vehicles and, as mentioned, we will cover the most popular alternatives. We see that there are a few goals that we might seek with regard to our investments. One goal is to generate positive income, also known as cash flow. Another goal is to increase the value of our<\/div>\n<div class=\"glossarizer_replaced\" aria-expanded=\"false\">investment, also known as\u00a0capital appreciation. At the very least, we want to preserve the value of our investments over the long term. Lastly, we could also seek both goals of cash flow and\u00a0capital appreciation. As we introduce each\u00a0investment\u00a0alternative, we will discuss the goals associated with each\u00a0investment\u00a0alternative and the risks that each carries.<\/div>\n<p class=\"lt-biz-79462\">Here is another important definition that revisits our distinction of being an investor or a<\/p>\n<div class=\"glossarizer_replaced\" aria-expanded=\"false\">speculator\/trader:<\/div>\n<blockquote>\n<p class=\"lt-biz-79462\"><em>\u201cAn\u00a0<\/em>investment <em>operation is one which, upon thorough analysis, promises safety of\u00a0<\/em><\/p>\n<div class=\"glossarizer_replaced\" aria-expanded=\"false\">principal<em>\u00a0and a satisfactory return. Operations not meeting these requirements are speculative.\u201d \u2013 Benjamin Graham<\/em><\/div>\n<\/blockquote>\n<p class=\"lt-biz-79462\">This definition, Dear Readers, is very near and dear to Your Humble Author\u2019s heart. This quote is from\u00a0<a class=\"link-https\" href=\"https:\/\/www.google.com\/search?q=the+intelligent+investor&amp;sxsrf=ALeKk01hksHhdDOiqjs_57wapSz3uW28Mw%3A1624812366085&amp;source=hp&amp;ei=TqvYYM6vArHE0PEPi6OhiAY&amp;iflsig=AINFCbYAAAAAYNi5XlydBvbVYkxs5vfCgVjK1MKMVEFY&amp;gs_ssp=eJzj4tTP1TcwrywrqjRg9JIoyUhVyMwrSc3JyUxPzSsBsstSi0vyiwDqIw1N&amp;oq=the+&amp;gs_lcp=Cgdnd3Mtd2l6EAEYADIHCC4QJxCTAjIECC4QJzIECCMQJzIECAAQQzIECC4QQzIECAAQQzIECAAQQzIECC4QQzIECC4QQzIECAAQQ1CsBFj1B2CoG2gAcAB4AIABlwGIAbcEkgEDMC40mAEAoAEBqgEHZ3dzLXdpeg&amp;sclient=gws-wiz\" target=\"_blank\" rel=\"external noopener nofollow\"><u><em>The Intelligent Investor<\/em><\/u><\/a>, written by\u00a0<a class=\"link-https\" href=\"https:\/\/en.wikipedia.org\/wiki\/Benjamin_Graham\" target=\"_blank\" rel=\"external noopener nofollow\"><u>Mr. Benjamin Graham<\/u><\/a>. Mr. Graham was Mr. Warren Buffett\u2019s teacher and mentor. Eventually you will want to read\u00a0<em>The Intelligent Investor<\/em>. (Don\u2019t read it as your first book! There are better books to read as your first book on investing. Please see the\u00a0<a class=\"link-https\" href=\"https:\/\/docs.google.com\/document\/d\/1UMe6PZ9-dRhlRQoSBPN2hTnR8QIgWFb7Fxv0EW1ZXcY\/\" target=\"_blank\" rel=\"external noopener nofollow\"><u>Bibliography<\/u><\/a>\u00a0for which books you should read first.) We will return again and again to this definition. If nothing else, we want you to understand the difference between prudent investing for the long term and speculating\/trading in the short term.<\/p>\n<p class=\"lt-biz-79462\">Mr. Buffett is famous for boiling down Mr. Graham\u2019s concepts into very simple sayings. To illustrate this concept, Mr. Buffett famously said, \u201cRule #1: Don\u2019t lose money. Rule #2: Never forget Rule #1.\u201d Although we will see that investment\u00a0values bounce up and down all the time, if you do your research and choose prudent,<\/p>\n<div class=\"glossarizer_replaced\" aria-expanded=\"false\">long-term\u00a0investments that have done well over time and should continue to do well into the future \u2012 and you don\u2019t panic when the markets fall \u2012 you won\u2019t lose money in the long term<sup>*<\/sup>. You won\u2019t be a\u00a0speculator\/trader. You will be an investor.<\/div>\n<p class=\"lt-biz-79462\">We will now discuss various characteristics and attributes of the major investment\u00a0alternatives.<\/p>\n<p class=\"lt-biz-79462\"><sup>*<\/sup><em>Disclaimer<\/em>: Please note that\u00a0investment\u00a0success is not guaranteed. If technologically based civilization cracks, falls, and dissolves into a pool of tears, then all bets are off. Of course, if that happens, you won&#8217;t be worrying about your investments. You&#8217;ll be joining the teeming masses digging for beetle grubs and boiling bark for dinner. Personally, I don&#8217;t believe this is going to happen any time soon. I am very optimistic. Failure is not an option. But the truth is that nobody knows what the future will bring. Oh, well.<\/p>\n<p class=\"lt-biz-79462\">We will now discuss various characteristics and attributes of the major investment\u00a0alternatives.<\/p>\n<\/div>\n<footer class=\"mt-content-footer\">\n<hr class=\"autoattribution-divider\" \/>\n<div class=\"autoattribution\">\n<p>This page titled\u00a0<a class=\"internal mt-self-link\" href=\"https:\/\/biz.libretexts.org\/Bookshelves\/Finance\/Introduction_to_Investments_(Paiano)\/01%3A_Chapter_1\/01%3A_Introduction_Overview_and_Risk_versus_Return\/1.01%3A_What_Is_an_Investment\" target=\"_blank\" rel=\"internal noopener\">1.1: What Is an\u00a0<\/a>Investment<a class=\"internal mt-self-link\" href=\"https:\/\/biz.libretexts.org\/Bookshelves\/Finance\/Introduction_to_Investments_(Paiano)\/01%3A_Chapter_1\/01%3A_Introduction_Overview_and_Risk_versus_Return\/1.01%3A_What_Is_an_Investment\" target=\"_blank\" rel=\"internal noopener\">?<\/a>\u00a0is shared under a\u00a0<a href=\"https:\/\/creativecommons.org\/licenses\/by-nc-sa\/4.0\" target=\"_blank\" rel=\"nofollow noopener\">CC BY-NC-SA 4.0<\/a>\u00a0license and was authored, remixed, and\/or curated by\u00a0<a href=\"https:\/\/wonderprofessor.com\/\" target=\"_blank\" rel=\"nofollow noopener\">Frank Paiano<\/a>.<\/p>\n<\/div>\n<\/footer>\n","protected":false},"author":33,"menu_order":2,"template":"","meta":{"pb_show_title":"on","pb_short_title":"","pb_subtitle":"","pb_authors":[],"pb_section_license":""},"chapter-type":[],"contributor":[],"license":[],"class_list":["post-490","chapter","type-chapter","status-publish","hentry"],"part":485,"_links":{"self":[{"href":"https:\/\/pressbooks.ccconline.org\/accinvestments\/wp-json\/pressbooks\/v2\/chapters\/490","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/pressbooks.ccconline.org\/accinvestments\/wp-json\/pressbooks\/v2\/chapters"}],"about":[{"href":"https:\/\/pressbooks.ccconline.org\/accinvestments\/wp-json\/wp\/v2\/types\/chapter"}],"author":[{"embeddable":true,"href":"https:\/\/pressbooks.ccconline.org\/accinvestments\/wp-json\/wp\/v2\/users\/33"}],"version-history":[{"count":2,"href":"https:\/\/pressbooks.ccconline.org\/accinvestments\/wp-json\/pressbooks\/v2\/chapters\/490\/revisions"}],"predecessor-version":[{"id":492,"href":"https:\/\/pressbooks.ccconline.org\/accinvestments\/wp-json\/pressbooks\/v2\/chapters\/490\/revisions\/492"}],"part":[{"href":"https:\/\/pressbooks.ccconline.org\/accinvestments\/wp-json\/pressbooks\/v2\/parts\/485"}],"metadata":[{"href":"https:\/\/pressbooks.ccconline.org\/accinvestments\/wp-json\/pressbooks\/v2\/chapters\/490\/metadata\/"}],"wp:attachment":[{"href":"https:\/\/pressbooks.ccconline.org\/accinvestments\/wp-json\/wp\/v2\/media?parent=490"}],"wp:term":[{"taxonomy":"chapter-type","embeddable":true,"href":"https:\/\/pressbooks.ccconline.org\/accinvestments\/wp-json\/pressbooks\/v2\/chapter-type?post=490"},{"taxonomy":"contributor","embeddable":true,"href":"https:\/\/pressbooks.ccconline.org\/accinvestments\/wp-json\/wp\/v2\/contributor?post=490"},{"taxonomy":"license","embeddable":true,"href":"https:\/\/pressbooks.ccconline.org\/accinvestments\/wp-json\/wp\/v2\/license?post=490"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}