Australian (ASX) Stock Market Forum

What's the difference between trading/investing and gambling?

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You know -----

I learnt in business that ones success can be greatly improved or severely deminished by having the wrong person in the wrong position.
My staff influence my income and hence my lifestyle just as I influence theirs.

Life without quantified risk is a life of mediocrity.

It would be in both your interests to understand risk and learn all you can about quantifying it.Will make for a happier marriage I assure you!
 
what i like about being in the market is...that its like a race that never ends, u can
take some or all of your money out when your in front, u can switch horses and
take advantage of situations..like the recent interference in our market/race.

Like ive said before, the people who brought shares in HIH, 1Tel and Centro didn't
think they were gambling, they thought they were investing...they were wrong.
 
Re: What is the difference between trading/investing and gambling?

kennas said:
Trading price action, this may be the case, but 'investing' requires some judgement of the available facts, resulting in a calculated risk take. It's probably why some people prefer technical trading as opposed to investing.

Perhaps there's a greater 'gamble' with investing...
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Tend to agree, Kennas.
 
heed tech/a - whether fundamental or technical, adjust positions according to risk. gambling is taking a position (investor, fundamental, technical) where risk outweighs potential return. Risk has a level of subjectivity but should constantly be reassessed. (fundamental and techinical)
 
Tell Miss Prawn This:

Gambling, if I put 10K on Red and Black comes up I lose everything.

Investing, I did put 10K on CBA in 1996 and now it's worth 46K plus the dividends keep coming in.

Totally different, cheers.:)
 
Re: What is the difference between trading/investing and gambling?

prawn_86 said:
Agreed.

But what is it that seperates us in the sharemarket, from those in a casino or on the track?
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Aren't we more sophisticated, because we're gambling, sorry ,speculating in the financial markets and not in a casino or at the track? Please break it to me gently if I've be lured into thinking falsely :D
 
ROE said:
Uncle Ben and Uncle David in their Security analysis book stated

"An investment operation is one which, upon thorough analysis promises safety of principal and an adequate return. Operations not meeting these requirements are speculative."
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By that definition I reckon you'd be hard-pressed to put a cent of your capital near a share market at almost any time during the last 20 years.

ASX.G
 
I'm starting to think if you have money in the stockmarket now your taking a gamble;)
 
kgee said:
I'm starting to think if you have money in the stockmarket now your taking a gamble;)
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Life is a gamble. Investing done with an educated guess is less of a gamble than some things I can think of. The bigger the potential profit the bigger the risk. All you need to do is find a comfort zone in which to operate.
 
nioka said:
Life is a gamble. Investing done with an educated guess is less of a gamble than some things I can think of. The bigger the potential profit the bigger the risk. All you need to do is find a comfort zone in which to operate.
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That is a myth, you can take great risk without much return at all if you don't do your home work and understand what you get yourself into.

and it can go the other way, you can take minimum risk and still have great reward :D
 
When gamblers lose, they cop it on the chin.

When "traders" lose, they blame somebody else and demand government intervention.

That's the difference.
 
xoa said:
When gamblers lose, they cop it on the chin.

When "traders" lose, they blame somebody else and demand government intervention.

That's the difference.
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Ahahhahaha! Silly gamblers, they don't know about the free money safety net traders have :)
 
Bill M said:
Investing, I did put 10K on CBA in 1996 and now it's worth 46K plus the dividends keep coming in.

Totally different, cheers.:)
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I was just thinking about how speculative resource stocks are approached by people. There must be a high percentage of speculative resource stocks that will never make a profit and never pay a dividend yet all and sundry want a piece of them.
There are blue chip stocks that turn a profit and pay a dividend BUT the higher risk taker in most of us will succumb to the lure of (possible) rapid and/or multiple price increases. The gambling stocks are also a self fulfilling prophecy in that the `value` is never quite clear so the prices swing wildly until some clarity is revealed in time. The price swings attract more and more gam I mean traders which creates the wider and wider swings.

The line between gambling (oops) trading and investing is very clear.
 
Seems full-time/professional trading isn't the only can of worms open today. My view? Investing is trading, but trading is not necessarily investing, and both are gambling. I say this because I see investing as trading for the longterm in just one direction. Some people would suggest that they have different aims, but in the end both seek to profit by exploiting a change in price.

I say they're both gambling, because the proper definition of gambling is to place a stake on an uncertain outcome, which applies to almost all trading (and therefore investing). Unfortunately, "gambling" has a negative connotation thanks to most participants lacking skill, the house edge, and the general lack of understanding of probability and expectancy. Tell me, what's the difference between a professional blackjack player, a professional poker player, a professional sportsbettor and a trader?

I'm sure everyone has their own view, this is just mine.
 
Mr J said:
but in the end both seek to profit by exploiting a change in price.
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What about those that gain positive cashflow through investing? That CF is either then used to pay off a margin loan, thereby expanding the capital base, or to reinvest also expaniding the capital base, and no change in price is needed (in theory).
 
Mr J said:
I say they're both gambling, because the proper definition of gambling is to place a stake on an uncertain outcome, which applies to almost all trading (and therefore investing). Unfortunately, "gambling" has a negative connotation thanks to most participants lacking skill, the house edge, and the general lack of understanding of probability and expectancy. Tell me, what's the difference between a professional blackjack player, a professional poker player, a professional sportsbettor and a trader?
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It is an interesting point, however gambling is generally a paid risk with a capital return only outcome that will definately be known at a defined time (either the turn of a card, the drop of a ball or finish of a race). Obviously derivatove traders have a timeframe that is not entirely within their control, however most have the option of an early exit if they choose.

Trading and investing generally empower the trader/investor in that they own the dynamic of determining the exit point (whether that be a win or loss). In additon, most investors do (a prawn has alluded to) include some form of cashflow in their expectations of return, in many cases holding long term on a cashflow basis only.

I guess in a nutshell trading & investing is a more dynamic activity that affords a person more control in the outcome - personally I don't gamble, so perhaps on some level I am a control freak.
 
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