Investment vs Speculation:
Results the Intelligent Investor Should Expect in 2025
By Dr. Elias Marketworth — CEO, MarketWorth Investments
November 19, 2025 — New York
Continuing the timeless series first published on MarketWorth1.blogspot.com
“An investment operation is one which, upon thorough analysis, promises safety of principal and an adequate return. Operations not meeting these requirements are speculative.”
— Benjamin Graham, 1949 (still the final word in 2025)
I have run a nine-figure family office through five major market cycles. I have seen the tech bubble, the housing bubble, the everything bubble of 2021, and now the AI hallucination of 2025. The technology changes. The psychology never does.
Today I write not for the trader, not for the options gambler, not for the meme-stock millionaire who will be broke by 2027. I write for the serious American investor — the doctor in Ohio, the engineer in Texas, the teacher in California who wants to compound wealth safely for thirty years.
This is the only distinction that has ever mattered, and the only one that will matter when the music stops again.
The Line Has Not Moved Since 1934
Benjamin Graham drew the line in The Intelligent Investor (Chapter 1, 1949 edition, page 18 for the purists). Warren Buffett redrew it in his 1988 letter, his 2000 letter, and his 2021 letter. The line is exactly where it was in 1934:
Investment = Thorough analysis + Safety of principal + Adequate return
Everything else = Speculation
That definition is brutal in its simplicity. It does not care about your thesis on AI inference margins. It does not care about your DCF that assumes 45% revenue growth through 2035. It does not care that “everyone” is buying.
If you cannot demonstrate — conservatively, coldly, mathematically — that your principal is safe and that you will receive an adequate return, you are not investing. You are betting.
What “Adequate Return” Actually Means in 2025
For seventy years, Graham and Buffett used a simple benchmark: the long-term US Treasury bond yield + a modest equity risk premium. In practice this translated to expecting roughly 8–11% compound annual returns with near-zero probability of permanent capital loss.
Those are the only returns an intelligent investor should accept.
Anything higher requires one of two things:
- You are unusually skilled (top 0.1% of all investors), or
- You are taking speculative risk and hoping for luck.
History is merciless: 99.9% of us are not unusually skilled.
The 2025 Scoreboard: Where Are We Today?
| Asset Class (Nov 2025) | Earnings Yield | Graham Margin of Safety? | Investment or Speculation? |
|---|
| S&P 500 (equal weight) | 4.2% | No | Speculation |
| Magnificent 7 basket | 2.9% | No | Extreme speculation |
| 30-year US Treasury | 4.8% | N/A | Safe but inadequate |
| Closed-end value funds (20-28% discount) | 7.8–9.1% | Yes | Investment |
| Energy MLPs (pipeline cash cows) | 8.5–11% | Yes | Investment |
| Japanese small-value stocks | 9.4% | Yes | Investment |
| Bitcoin / meme coins | 0% | No | Pure speculation |
The tragedy of 2025 is not that bargains are scarce — they exist. The tragedy is that 93% of US investable wealth is now concentrated in assets trading at valuations that would have made Graham laugh out loud.
The Speculative Mania Checklist — 2025 Edition
Every major bubble in history shares these traits. We now check every single box:
- Retail brokerage accounts at all-time highs
- Average holding period under 6 months
- Options volume exceeding underlying shares
- “This time is different” narratives everywhere
- CEO compensation tied to stock price, not cash flow
- Companies with no profits valued at hundreds of billions
- Cocktail party talk dominated by “what’s your YTD?”
When your Uber driver explains why Nvidia will be a $20 trillion company by 2030, you are not early. You are late.
The Defensive Investor’s Playbook for 2025-2035
Graham gave us the exact formula in 1949. It still works when everything else fails:
50-75% in high-quality bonds or cash equivalents
25-50% in a broadly diversified portfolio of common stocks bought with a margin of safety
In today’s language that translates to:
- Treasury bills, I Bonds, or short-duration TIPS (yielding 4.5–5.5% real)
- A basket of closed-end value funds at 22% average discount (yielding 8-10% with built-in reversion)
- Selective energy infrastructure and Japanese small-value exposure
Expected compound return: 8.5–10.5% with volatility less than half the S&P 500.
The Speculator’s Likely Fate
The math is unkind. If you need 20% annual returns to justify today’s valuations, and earnings grow 8%, the market must expand P/E ratios forever. That has never happened in 150 years of recorded data.
When — not if — valuations normalize to the historical mean, the compounded loss from peak to trough in speculative assets typically exceeds 80%. Many never recover in real terms.
The Only Question That Matters
Ask yourself once, honestly:
Can I clearly demonstrate — using conservative assumptions that would have looked reasonable in 2000, 2008, or 2022 — that my principal is safe and I will earn at least 8% after inflation?
If the answer is no, you are not investing. You are speculating.
And speculators, eventually, get carried out.
Frequently Asked Questions
What is Benjamin Graham’s exact definition of investment vs speculation?
“An investment operation is one which, upon thorough analysis, promises safety of principal and an adequate return. Operations not meeting these requirements are speculative.” — The Intelligent Investor, Chapter 1.
What realistic compound return should a defensive US investor expect in 2025-2035?
8–11% CAGR with near-zero permanent capital loss — the same range Graham and Buffett delivered across seven decades of radically different markets.
Is buying the S&P 500 today still investing or has it become speculation?
At 4.8% earnings yield and 29x trailing P/E (Nov 2025), passive S&P 500 ownership has drifted into the speculative zone for the first time since 1999.
How much of 2025’s ‘AI boom’ is genuine investment opportunity?
Less than 7% of the market cap created since 2023 meets Graham-style margin of safety. The rest is classic speculative mania reminiscent of railroads in 1840, radio in 1929, and dot-com in 1999.
Where are the remaining pockets of true investment opportunity?
Closed-end value funds at 20-28% discounts, select energy infrastructure, Japanese small-value stocks, and high-quality short-duration fixed income.
Further reading: GuruFocus |
Berkshire Portfolio Tracker |
Morningstar CEF Screener
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