From the Founder: Investing vs. Speculating

I find that year-end is such a perfect time to reflect on the past year. 2025, like many years, saw some very surprising results. [Please note that all of the returns listed below are rough estimates from mid to late December 2025.]

As you might imagine, investments are a topic people like to discuss with me, whether that is in a meeting with a long-time client, at a family and friends gathering, or even in the morning at the gym. Reflecting on 2025, I couldn’t help but think about the investments people asked me about most.

At the top of the list recently is gold, which appears to be up around 60-65% for the year. Next is silver, which is up around 120%. Finally, there is NVIDIA. It appears that this stock is up around 900% over the last three years – WOW!

How about one I haven’t heard anyone ask about lately: Bitcoin is down 16% for 2025 and is about 30% below its all-time high. How interesting that it’s constantly talked about when it’s going up, but as if it didn’t exist this year when it was down?

What do all of these topics have in common? They help me underscore the difference between investing and speculating. Investing means putting your money into stocks or businesses that can make products or provide services. This way, you can figure out what they’re worth by looking at how much they can produce.

For example, a stock can be valued based on its profit, cash flow, and dividends; a bond can be valued based on its dividend payments, the safety of the company or government, and the protection it offers. For real estate, you can look at its rental income and operating expenses. Farmland can be analyzed for crop yields, estimated crop prices, and the costs of growing and bringing the crops to market.

Speculation is guessing whether prices will go up or down on something that doesn’t have real value beneath it. I think crypto of all kinds, including Bitcoin, is a good example of this—it can be used to buy things, but it doesn’t hold value on its own because it doesn’t make or produce anything. On top of that, its prices change a lot, and there aren’t many rules governing it.

Gold and silver don’t create anything either, but at least people can think about their prices compared to inflation.

So, in short, whether something can create real value is what separates investing from just guessing at prices.

You might be wondering – why did I include NVIDIA in my initial observations? Yes, NVIDIA is a company, and it is currently wildly profitable. However, in every single discussion I’ve had about NVIDIA over the past few years, no one mentioned how profitable the company is. The only thing anyone mentioned was how much the stock price was rising and how far it could continue to increase.

Please understand, none of this is to say that speculating on the price of something is ‘bad’ or ‘wrong.’ But our study of financial planning tells us that it is risky. It is the underlying value of an investment that can provide stability. If you decide to speculate on something without that underlying value, there is nothing wrong with that, but please don’t be surprised if the price changes wildly. That is basically what you signed up for.

In the end, some people like to speculate, and some don’t, and that is okay. The general idea is to keep 98 or 99% of your money in serious investments and keep your speculating to your last 1 or 2%. That can allow you to enjoy the game of speculation without worrying about running out of money when you retire.