The worst-case scenario for the investor is to be forced to invest at a market peak and then be forced to withdraw their money from the market after a subsequent stock market crash on the bottom. But how serious could this damage be? Hi Hank It`s a matter of semantics. Definition of term: (1) engaging in gambling activity for money or (2) betting or engaging in risky actions in the hope of a pleasant outcome. Or do both qualify or become specific in our definition? Is all life a game or a game of chance? Is it a gamble to put money in the bank or in your mattress? Could banks fail? Could your house catch fire and burn the mattress? When does the game have a negative connotation? When it becomes an addiction or compulsion. When? When it interferes with interpersonal relationships, educational/professional goals or causes significant subjective stress. Some might call this the hunt for a false idol. A fisherman had been fishing all day, so he pulled up his nets and headed for shore. When he arrived, a stranger told him to go out again and cast his net again – now it would be a gamble for the fisherman and in his eyes a bad one! He did it anyway. Bas, and behold, he brought a whole net full of fish. I bet it would make a dime, but there`s an irony in this story.

He thought he was a for-profit fisherman and a “fisherman of men.” Well, it`s a risky business! I doubt that St. Peter was a man of play, but he was that day. When you play, you don`t own anything. There is no reason why your expected return should be anything other than negative. In casino games, the weather works against “home”. In sports betting and lotteries – two of the most common “gambling” activities that the average person engages in – bettors bet against each other in one way or another because the number of players helps determine the odds. In horse racing, for example, placing a bet is actually a bet against other bettors: the odds for each horse are determined by the amount of money placed on that horse and constantly change until the race actually begins. “Why stocks are rising” is a question that deserves its own article. This is a really interesting fundamental question, and that`s why I`m going to make it the subject of my next post. For now, we can summarize by first confirming that stocks have indeed risen most of the time throughout history: I was lucky that my father put me on the right foot. Real investment is not like gambling.

And it`s more than just saving. This is certainly serious business, but it can be immensely rewarding and potentially a great way for you and your friend to achieve your long-term goals. We start, like all good research articles, with Wikipedia. According to Wikipedia, gambling: stock market success requires more intelligence and skills However, it is not a risk-free added value. Some shares will prove worthless. But on average, gains are likely to outweigh losses as markets rise over time (why markets rise, you`ll see more in my next article). Rising markets mean that wealth is created, which is the opposite of a zero-sum game. Investors should always decide how much money they want to risk. Some traders typically risk 2-5% of their capital base for a particular trade. Long-term investors are constantly hearing the benefits of diversification across asset classes. However, risk and return expectations can vary significantly within the same asset class, especially if it is a large asset class, as is the case with equities.

For example, a blue-chip stock traded on the New York Stock Exchange has a very different risk-return profile than a micro-cap stock traded on a small exchange. So, if you imagine a player in this article, imagine that he or she plays roulette or slots. I think that`s what most people refer to when comparing investment to gambling. Their argument tends to be: “Investing is based on luck and I could lose all my money” and not: “Active investment management is similar in decision-making to some games of chance like poker.” Another important difference between investing and gambling: you have few options to limit your losses. If you spend $10 a week on the NFL office pool and you don`t earn, you lose all your capital. If you bet on pure gambling activities, there are no mitigation strategies. New innovations in online sports betting have been added to help players minimize risk when betting on games, such as in-game enhancement, which can be changed during play, and partial withdrawal options, which allow a portion of the bet to be recovered if an outcome seems to go against the best. Investors study trading patterns using stock charts to predict the price of a stock in the future. Investors have a clear advantage in gathering information. Company information is easily accessible on the Internet and through documents filed with the Security and Exchange Commission (SEC). Investors can find a wealth of information in the SEC`s Edgar database of corporate stock filings. Before we conclude, one last difference between gambling and investing concerns zero-sum games.

If you`ve been a fairly successful gambler and are considering venturing into the stock market with the idea that you could do it like in casinos, you may need to realign your expectations. If you imagine a sliding scale for the amount where probability plays a role in the outcomes, where 100% chance is on one side and 100% safety on the other, then the game is at the furthest point at the “luck” end, and the investments would be somewhere between the center and the end of certainty. Speculation falls somewhere between investment and gambling, depending on the degree of speculation. The more you speculate, the closer you are to playing on this sliding scale. In contrast, investors and traders have a variety of ways to prevent the total loss of venture capital. Setting stop losses on your equity investment is an easy way to avoid undue risk.