There is a fundamental misunderstanding in the financial world about what constitutes an “investment.”
At Financial Zen, we draw a hard line between Investing and Speculating.
We only consider stocks to be true long-term investments. Here’s why.
1. The Magic of “Thin Air”
When you buy a stock, you are buying ownership in a company. Companies are engines of creation. They take raw materials, human ideas, and time, and they create goods and services that improve our world. They create value out of thin air.
– Apple takes glass and silicon and turns it into an iPhone.
– Pfizer takes chemicals and research and turns it into a cure.
– Financial Zen takes anxiety and complexity and turns it into clarity and a roadmap for financial freedom.
The more value they create, the more people buy. The more people buy, the higher the stock goes. It is a virtuous cycle based on production.
2. The “Greater Fool” Problem
Now, look at speculative assets like Gold, Silver, Crypto or TRADING stocks. These assets do not produce anything. They do not have cash flow. They do not invent.
If you buy a bar of gold today and put it in a safe for 20 years, when you open that safe, you will still have… one bar of gold. It didn’t have babies. It didn’t release a new product.
The only way you make money on gold or crypto is if you find someone tomorrow willing to pay you more for it than you paid today. That is speculation. It relies entirely on market sentiment, not value creation.
The Woo-Woo Part (That is actually true) Can you make money trading crypto or gold in the short term? Absolutely. You can make a fortune. But that is trading, not investing. Sometimes you’ll win, and sometimes you’ll lose.
For the long term, we want to invest in things that create value.
Investing in the stock market is really just betting on the ceaseless, however haltingly, progress of mankind. It is a bet that humans will continue to invent, solve problems, and make the world better.
And that is a bet we are always willing to make.