Defining Investment

Generally, investment is defined by dictionaries as, transacting to produce income or profit.

There are only three investment groups; ownership, lending and cash equivalents.

Ownership Investment

This class of investment is the most volatile but also the most profitable.  Examples are:

Lending Investments

A little lower risk but then lower returns.  You become the bank with associated risks.  Examples:

Cash Equivalents

Any cash investment that can be converted to cash immediately.

Almost an Investment

Here we could think of our education, a cup of coffee to wake us up for longer working hours or a lawnmower to be more time efficient.  Consumer purchases depreciating over time are not investments.

Bottom Line

There are three types of investments: ownership, lending and cash equivalents.  There is no fourth category of consumer purchases.  Admittedly, it’s a clever piece of advertising that removes some of the guilt from impulse purchasing. The decisive test is whether there is a potential to turn a profit. The operative word here is; “potential” because not every legitimate investment makes money.  Making money through investing requires research and evaluating different investments, not simply knowing what is and is not an investment.  That said, being able to see the difference between an investment and a purchase is an essential first step.

Trying Times; Will It End In Tears?

As the S&P 500 makes a run at its 2007 high, many stocks have already arrived there. Some big name companies have been making all-time highs, and the uptrends are looking very strong. But is this rally sustainable? Recent surges show strong buying interest, but rarely are such aggressive moves sustainable. Here we look at the possible entry points and danger signals in these high flying stocks.

Johnson & Johnson (NYSE:JNJ) has had a great start to 2013; starting out the near $70 it closed Jan. 29 at $74.41, up about 6%. The stock recently broke out of a triangle pattern, which began in October, providing a target price of $76. Therefore, the stock looks to have a bit more room to go on the upside in the short term. Volume was quite light on the breakout though, so those looking for a better (lower) price in the coming weeks could get it. There are two old resistance levels that should now provide support on pullbacks - approximately $70 and $68. This is likely to provide a better long-term entry point. Watch the trendline that began in 2011; it currently intersects near $64 and a drop below that indicates further downside is likely.