From dhenwood at panix.com Sat May 22 10:02:18 1999
By the old-fashioned definitions, someone who buys a stock for
its dividend is investing, and someone who buys a stock for
mere price appreciation is speculating.
Feh. All you're saying is that humans are naturally long: buying a stock or selling a stock is speculation. When you're long, you are speculating that it will go up; when you're short, you're speculating that it'll go down. This old-fashioned (glad you call it that!) idea that buying a stock for a dividend is investing is fallacious: if you buy a stock for a dividend (nevermind that these days, most of the stocks that appreciate pay little or no dividends) you are *speculating* that the dividend plus the residual value of the stock ex-dividend is better than doing nothing or something else.
Less mustily, owning a stock represents a claim on real profits
and real assets. Shorting a stock gives you title to nothing
except a hope that its price will sink.
It's just a question of polarity; you're setting up the equation correctly, but you don't see that buying this 'claim' is identical to selling this 'claim' ... reverse the time dimension of the process: sell before you buy. It's the same.
There are only two kinds of market participants: specs and hedgers.
You can't be a hedger simply by buying a stock.
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I wrote this last line because it rolled off my fingertips naturally. But I had to think for a minute who the hedger is in the equity markets. After thinking it through, it's clear: it is the issuer.
/jordan