Amount Quote by Seth Klarman
“If an asset has cash flow or the likelihood of cash flow in the near term and is not purely dependment on what a future buyer might pay, then it's an investment. If an asset's value is totally dependent on the amount a future buyer might pay, then its purchase is speculation.”
About This Quote
Source Book: Margin of Safety by Seth Klarman, 1991
An asset that generates or is expected to generate cash flow soon is an investment; if its value relies solely on future resale price, it is speculation.
In simple terms: Cash‑flow assets are investments; resale‑only assets are speculation.
Key Takeaway
Focus on cash‑flow generating assets.
Themes
investment
speculation
valuation
Mood
cautious
analytical
Type
financial
educational
When to use this quote
- real estate
- stock buying
- private equity
- venture capital
- commodity trading
Key Concepts
cash flow
future resale price
risk assessment
Questions to Reflect On
- Do you assess cash flow before buying?
- How do you differentiate speculative from investment opportunities?
A Different Perspective
Speculation can still be profitable but carries higher uncertainty.
