By Adriaan Pask, Chief Investment Officer, PSG Wealth

Twenty-four-hour trading apps, viral stock tips and a growing menu of leveraged exchange-traded products have created the most speculation-friendly environment in living memory. For many retail investors the temptation is irresistible: why settle for the measured progress of a long-term financial plan when a single click seems to promise instant, outsized gains? The answer, as recent market history has shown with painful clarity, is that speculation and its close cousin “overreach” can quietly erode both capital and confidence.

Speculation and overreach defined

Speculation is the pursuit of high-risk opportunities driven by market sentiment rather than rigorous analysis. Overreach occurs when otherwise disciplined investors abandon their defined risk appetites and established investment plans to chase those same high-octane trades. The two behaviours feed on one another, and both have migrated from the day-trading fringes into mainstream investing.

This should not worry long-term investors because speculation widens the range of possible outcomes. Increased volatility does not merely add the risk of loss, it invites destructive behaviour — panic-selling at the bottom and buying back near the top. That behavioural penalty, more than any single market setback, undermines long-term wealth creation.

A shrinking time horizon

The numbers are stark. In the 1960s the average holding period for shares on the US stock market was roughly eight years - today it is five months. Similar excesses appear elsewhere. Annual trading in crude-oil futures is about 400 times the volume of physical production, while daily cryptocurrency turnover is an eye-watering 1 000 times the value of newly mined coins. When assets change hands this quickly, price discovery becomes a lottery rather than a sober assessment of fundamentals.

Technology is an accelerant. Zero-commission platforms allow investors to transact anywhere from their smartphones, and slick marketing promises such as “market-beating” returns if one will only act now. Activity, however, is not the same as progress and the line between the two is blurring fast.

The leverage dilemma

Matters become even more complex with leverage. Leverage is no longer confined to sophisticated investors with substantial risk appetites, but it has found its way into the mainstream as well. For example, leveraged exchange traded funds (ETFs) provide leveraged exposure to single stocks, amplifying returns and losses using derivatives and debt.

However, they carry substantial risks, including volatility decay and the potential for amplified losses, as evidenced during the first few days of April this year, when some leveraged ETFs lost 50% of their capital.

This all has market consequences as unchecked speculation and overreach distort valuations. Assets become mispriced not because fundamentals have changed, but because narrative has. Under-valuation can create attractive entry points for patient capital, yet over-valuation sets the stage for swift, painful corrections. Neither scenario serves investors whose long-term financial goals depend on a predictable compounding path.

A plan is not optional

The antidote is a robust, goals-based financial plan which focusses on reliable, well-researched strategies and investments, maximising the likelihood of achieving financial goals.

Investments are tools, not ends in themselves. If an investment does not advance the plan, or does so while introducing excessive uncertainty, it should be avoided. There are many tried and tested investment options that offer exceptional long-term returns without gambling on binary outcomes.

Importantly, investors should, with the help of a trusted financial adviser, consider potential downsides, assess worst-case scenarios and determine how these investments align with their long-term goals as defined in their financial plan.

For disciplined investors, speculation’s excesses need not be purely negative. When sentiment pushes prices well below intrinsic value, long-term buyers can step in. Conversely, when hype lifts valuations to unsustainable heights, prudent investors can trim exposures, rebalance or rotate into cheaper sectors. The key is to act from conviction built on research, not from fear of missing out.

Patience still pays

Capital markets ultimately reward perseverance. The compounding of moderate, repeatable returns has built more lasting wealth than any lottery-style trade. Resisting the siren song of speculation is therefore not about dulling one’s ambitions; it is about maximising the probability of meeting them. In an age of instant gratification, the most powerful edge investors can cultivate is patience, backed up by a clear plan which is executed with discipline.

Markets may behave like voting machines in the short term, but over time they still weigh fundamentals. Anchor your strategy to that enduring truth and the noise of speculation will fade into the background, where it belongs