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John Bogle on Investment and Speculation

Now, before I turn to the recent turbulence in the markets that I’m sure is on many of your minds this evening, I want to focus on the fundamental distinction between investment and speculation that I first touched on in that ancient thesis. Echoing the inspired wisdom of Lord Keynes, I defined investment as "forecasting the prospective yield on an asset" over its entire life. (Keynes used the term enterprise to describe this practice; today finance teachers describe it as discounted future cash flow.) Speculation, on the other hand, is “the activity of forecasting the psychology of the market."
-- John Bogle, Investing In Times of Market Turbulence, 2008