Is investing gambling?

[i4value]

Gambling is an activity that depends purely on luck. Buying a lottery is a gamble. So, playing the one-arm bandit or roulette in a casino is gambling.

But there are some activities that while appearing to be a gamble require some degree of skill. I am sure that the professional poker player will say that poker is such a game.

When it comes to the stock market, some invest blindly hoping to get rich by luck.  But you need skills to be a successful value investor.  Of course, a bit of luck helps.

When you have an activity where skill is required to win when played regularly, I would not consider it gambling.  Investing in the stock market is one such activity. Just because there are those that blindly invest hoping to win by luck does not make the game a gamble.

Using the gambling analogy, if you are a skillful investor you are acting as the house in a casino where the odds are stacked in your favour.  If you don’t develop your skills and invest as a novice you are likely to be like the guest in the casino.

[brattzz]

playing the stock market is gambling...

investing in the stock market, is different...

[Yoyo]

Errr, more often then not, I find I got played by the market, so am I a gambler or an investor?

[i4value]

I think we know that investing success comes from a combination of skill and luck. We don't control luck, but we can control our skill. So you learn how to invest property, you diversify, have a margin of safety, etc.

So if you feel that you often got played by the market, you should spend time improving your skill.

[weijian]

Errr, more often then not, I find I got played by the market, so am I a gambler or an investor?

Most of us started out reading "The Intelligent Investor". So armed with knowledge of Chapter 8 that talked about Mr Market (and espoused by the Oracle and his sidekick), we thought Mr Market was the fool while we could be the opposite.

So more often than not, most of us had to pay tuition fees to realize that it was the other way.  Yes, Mr Market is a manic, but that doesn't make us a psychologist!

Besides been a manic, Mr Market is also intelligent, hardworking, has insider information and many other things we are not......In actual fact, he is a better psychologist because he has managed to coax out our need for social proof, confirmation, loss aversion...

[brattzz]

Errr, more often then not, I find I got played by the market, so am I a gambler or an investor?

Depends on what you want out of the market lah...

So long as make money, any labels/names are fine!

[i4value]

If you read the Intelligent Investor and think that you have learned value investing because of this, then you are terribly mistaken. There is of course the margin of safety and Mr Market concept in the book. But the nuts and bolts of valuing investing today - company analysis and valuation - are not found in the book.