Exactly. NFLX represents a speculative bet, not so much an investment. Here are my working definitions of the two terms in context of the stock market and businesses:
"An investment is a commitment to holding a security as long as the underlying fundamentals and business prospects remain intact."
Take Apple, for example. Apple shares are an investment as long as Apple continues to perform as well as it is currently performing. As long as it continues to generate the revenues and earnings it is currently generating. Even if neither rise.
"Speculation is a bet on some future outcome, either positive or negative, that would materially change the fortunes of a business."
Note that the main difference here is that an investment relies upon the continuation of the status quo while speculation is a bet against the status quo.
Netflix represents a speculative bet that the company will grow earnings significsntly in order to grow into its current market valuation. It may well do so, but that's the bet that's being made here and such bets don't always pan out.
As an investor, you want to concentrate your holdings in investments and away from speculative bets. Ask any GTAT shareholder.
Name another company that's better than Apple. That's the way ps2gamer is thinking as a long term investor. I'm sitting on 7000 Apple shares, plus 140 call spreads with various strikes and expiration dates over the next two years. I'm very concentrated in Apple, with only a few small ($20k) positions taken recently, in GPRO and MU, to name a couple.
Diversification is for those who don't know what they're doing.
- Warren Buffett