The stock market is a gamble

[tech/a]

Life is a gamble.

We take a calculated risk getting out of bed in the morning.

The older you get the riskier GOING TO BED becomes.

 

[Sean K]

The older you get the riskier GOING TO BED becomes.

LOL Tech.

I wonder how you mitigate the risk of that later on? Wear and ECG to bed..

 

[wayneL]

LOL Tech.

I wonder how you mitigate the risk of that later on? Wear and ECG to bed..

...make her do all the work.

 

[tech/a]

...make her do all the work.

I KNEW that was coming!!

Your only as old as the woman you feel---eh!

 

[brty]

Family Guy,

Ok, so you have a plan that waits for a 13% price rise, and the cost to you is $30, so transaction costs are 23% of your profit. Yet your losses are held for the long term until they come back.

The longer you keep up this method, the greater the percentage of losing stocks in your portfolio. If you continue long enough/enough trades, you will get to the point where you hold only stocks that have gone down in value from your entry point (and have all your money invested in them).

Compared to 'conventional wisdom', instead of holding winners, you are cutting them short. You are holding losers, you are letting your losses run.

With this plan, slowly but surely the value of your entire portfolio will be reduced, you will underperform the indexes and prove to yourself your original theory, that shares are a gamble.

brty

 

[julius]

The older you get the riskier GOING TO BED becomes.

Hahaha...I just choked on a bit of ham sandwich

~~~~~

To the OP:

Here is the game - we flip a coin, heads you pay me $1, tails I pay you $2.

The majority don't understand the wager - who's paying who & where the odds stand.

Yes, it is a 'gamble', but do you want to play?

Bear in mind, if you only have $5 you could easily get wiped out...

 

[white_goodman]

i originally used $1000 buy in into stock but noticed the reward didnt match the risk.... my minimum now is around $3000 so the brokerage is less a %...still atm it hasnt been good, my entire portfolio is down around 25%

 

[xyzedarteerf]

no no no well sometimes it is. If you treat it like a casino it will be casino. If you treat is as an investment it will be.
I too often have this casino mentality, especially after a big loss really though the stock market is not a casino the money you invest/bet is used by the company to fund research/development/capital.

 

[Trembling Hand]

the money you invest/bet is used by the company to fund research/development/capital.

No its not. Fundraising and IPO it Maybe that but I would think that is about 0.000005% of the transactions.

 

[r34ztune]

thanks for your answers thus far, I'm new to this, not being negative, only trying to learn off more experienced traders here.
Still no-one answered my original question on fundamentals, like
1.FMG- how can a company with negative cashflow and nil sales achieve a stock price of $10?
2. Why do stocks move on headlines and rumours rather than concrete evidence?
3. Why do stocks fall, despite increasing EPS, and meeting sales targets?
If you can't pick a stock on evidence what method/s do you employ?

 

[Trembling Hand]

thanks for your answers thus far, I'm new to this, not being negative, only trying to learn off more experienced traders here.
Still no-one answered my original question on fundamentals, like
1.FMG- how can a company with negative cashflow and nil sales achieve a stock price of $10?
2. Why do stocks move on headlines and rumours rather than concrete evidence?
3. Why do stocks fall, despite increasing EPS, and meeting sales targets?
If you can't pick a stock on evidence what method/s do you employ?

Shares are priced on future performance/expectations not on the past.

 

[MichaelD]

1.FMG- how can a company with negative cashflow and nil sales achieve a stock price of $10?

Because it can.

2. Why do stocks move on headlines and rumours rather than concrete evidence?

Because they do.

3. Why do stocks fall, despite increasing EPS, and meeting sales targets?

Because they do.

If you can't pick a stock on evidence what method/s do you employ?

Price goes up - buy
Price goes down - sell

 

[tech/a]

Why does the Media have to devise a reason for rise and falls in the market on a daily basis.
Simply because people want to have a reason for everything.

Which brings me to this.

"The only reason some people get lost in thought is because it's unfamiliar territory."

 

[Temjin]

thanks for your answers thus far, I'm new to this, not being negative, only trying to learn off more experienced traders here.
Still no-one answered my original question on fundamentals, like
1.FMG- how can a company with negative cashflow and nil sales achieve a stock price of $10?
2. Why do stocks move on headlines and rumours rather than concrete evidence?
3. Why do stocks fall, despite increasing EPS, and meeting sales targets?
If you can't pick a stock on evidence what method/s do you employ?

MichaelD already answered this in the most simplistic form.

Remember the market efficient theory is based on every players in the market will think RATIONALLY and consider all available information before making a decision. This is inherently flawed because human emotions are involved.

Why does the Media have to devise a reason for rise and falls in the market on a daily basis.
Simply because people want to have a reason for everything.

Very true.

One could easily go back to the pre-tech boom and look at the brokers' explanations on why a particular tech stock is worth its price because of that and that.

 

[MRC & Co]

The casino and it's dealers are effectively gambling. Would you like their odds? I wouldn't mind!

 

[doogie_goes_off]

To gamble is to speculate with money you have, some speculate with money they do not. This is an area beyond a standard gamble. The odds wil dictate the outcome. Gambling is for beginners, the stock market relies on educated investors applying the better odss. Few bets are an island.

 

[doogie_goes_off]

To gamble is to speculate with money you have, some speculate with money they do not. This is an area beyond a standard gamble. The odds will dictate the outcome. Gambling is for beginners, the stock market relies on educated investors applying the better odds. Few bets are an island.

 

[AlterEgo]

I don't think there is any secrets for a trader.
To me it comes down to 1 thing LUCK
IMO any stock is a gamble

I once thought that too.

I tried to pick stocks on fundamentals like P.E ratios, EPS, LFL growth, meeting budgets ect but many times you fail, the s/market doesn't operate on evidence!!

So stop picking stocks by that criteria! That’s where you’re going wrong.

IMHO the stockmarket operates on the following 1.Greed 2.Fear 3.Confidence

Exactly!!! So now that you’ve come to that realization, you can understand why the above fundamental figures are totally useless to your prospect to make money and should therefore be totally ignored.

If you can't pick a stock on evidence what method/s do you employ?

You’re looking at the wrong sort of evidence. Try using technical evidence rather than fundamental. ie. The evidence of the action of the stock price itself. MichaelD, above, put it very simply “Price goes up – buy. Price goes down – sell.”. There’s more to it than that obviously, but basically if a stock is in an upward trend then you buy and ride with the trend until the trend comes to an end, then sell.


PS. This is IMO only, and I don't wish to start an argument on T/A vs F/A.

 

[kgee]

Of course it's a gamble....from a lot of the reply's here people seem to be suggesting that because your taking a calculated risk it's not gambling - nonsense.

Gather more information and use informed decision making with your trades seems to be what everyone is saying...but at the end of the day (unless your insider trading) no matter how many fact's and information you have gathered there is always the unknown....and I'd suggest the unknowns are usually bigger than the knowns.

Alternatively there is TA which if you boil things down is basically "trend following"....sounds like gambling to me

Proffessional gamblers say one of the biggest problems with gambling is confusing skill for luck and too often this leads them to having an inflated belief in their skill and the system they use.

Maybe thats the case with Investors as well, over the last how many years has the stock market been bullish with overall returns above 10%. I read last year that on the ASX 51% of companies went up 49% down. So even if you took a punt on it you still had a better chance of winning than losing

 

[AlterEgo]

Of course it's a gamble....from a lot of the reply's here people seem to be suggesting that because your taking a calculated risk it's not gambling - nonsense.

Depends on how you define gambling. There is certainly risk involved. But unlike the casino where the probability is stacked against you, it is possible to win consistently in the stock market. It's all about selecting the highest probability trades, and managing risk. Letting your profits run, and cutting losses short, ie. keep your losing trades small, and maximizing your profits on your winning trades.