Investing in shares = Gambling

HappyMJ

jimjames wrote: »

Breathing air involves a degree of risk, even lying in bed has some risk associated with it.

It generally seems to be the uninformed who thinking that investing is gambling although I'd suggest that day trading is more akin to gambling than long term investment.

Gambling involves a risk however small to get a gain. Breathing air isn't going to gain you anything it's just maintaining life.

It would be the uninformed that jump into shares without researching that would be the true gamblers. Investors who research properly and have a diversified portfolio are significantly reducing risk and the gamble pays off more often than not. Still a gamble to buy into one particular share but researched properly usually a worthwhile one.

jimjames

Carnival789 wrote: »

I definitely see it as gambling ( which I'm not saying is a bad thing) - and I've always wondered why savings and investments have been bundled together under the same heading on this forum.

As someone who is risk averse I am all about saving my spare cash - I'm not looking to invest it any where that means I may get back less than what I put in. Contributing to my work pension is as far as I'm prepared to go as far as investments are concerned!

Which is an interesting thought. So for very long term (pension) you understand that investment is a good idea and worth the risk. It would be far more risky to keep pension money in cash for 40 years so it's important to understand risk.

dunstonh

Gambling involves a risk however small to get a gain. Breathing air isn't going to gain you anything it's just maintaining life.

If you stop breathing, you die. So, doing anything that can cause you to stop breathing is a risk. Not doing anything is a risk as you become unfit and more likely to suffer.

Humans grow up learning about risk and will make decisions based on risk. Although there have been studies suggesting that we take so much risk out of society nowadays that children and young adults are less aware of risk than previous generations as they havent climbed trees and fallen out etc. Modern cars are safer and some people drive the cars thinking they are in tanks because of that.

In Germany, they do not fence railways in many areas. When asked about letting children play in areas where there is a railway line nearby, the Germans respond "don't be silly, the children know its dangerous and don't go near it". British children (and probably many adults) don't have that mentality as they have never had to mentally make that risk assessment.

Everything in life is a risk assessment. I am sitting here typing on a keyboard in a room. I am at risk of a number of events. Virtually all of them unlikely to happen. They are risks I havent even given a second thought to because they are extremely low risk.

I have become particularly concerned in recent times of sharp edges around the house and other areas. Never used to. However, someone I knew tripped over their dog and banged their head on a sharp object and died not long after.

Gambling is a risk assessment. Like everything in life.

Which is an interesting thought. So for very long term (pension) you understand that investment is a good idea and worth the risk. It would be far more risky to keep pension money in cash for 40 years so it's important to understand risk.

Absolutely spot on. Cash has no investment risk. However, it is guaranteed to have shortfall risk and inflation risk for the long term. Whereas investments may be subject to shortfall risk and inflation risk. So, its actually lower risk to have investments of an appropriate nature than it is to have cash. Even though technically, a risk scale will put cash at 1 and investments higher than that.

savings_my_hobby

Surely investing IS gambling.

It has to be as you are taking risk by investing.

Yes risk can and MUST be minimised by diversification of portfolios.

Yes investing in a diversified portfolio over a prolonged period is less risky (therefore less of a gamble) than betting on Man.city to win the Premier league this season or random stallion to win the grand national but as there is risk present it has to be seen as a gamble.

By investing you are also gambling that the returns over "x" period will out perform banking interest - which historically may or may not be the case but you wont need me to tell you that what happened historically is no guarantee for the future.

one definition of gambling is; To take a risk in the hope of gaining an advantage or a benefit.

With investing you take risk (however small or large) in the hope that you will receive financial advantage/benefit.

System

Aretnap wrote: »

Do you actually have an interesting or informative point to make, or are you just here to say words like "gambling" and "madness" a lot?

My point is that the stockmarket is basically a posh betting shop.

dunstonh

Surely investing IS gambling.

Do nothing is gambling too.

My point is that the stockmarket is basically a posh betting shop.

No. As has been said by myself and several others. investing is not gambling. However, both investing and gambling are risk assessments.

savings_my_hobby

dunstonh wrote: »

Do nothing is gambling too.

Yes, especially in times of inflation. As you put it in a previous comment it is an assessment of risk. As you rightly eluded to doing nothing also has its risks. The most obvious being inflation eroding the purchasing power of capital, having said that any investment would also have to beat inflation. I agree that you are more likely to beat inflation through investing properly than doing nothing therefore I conclude that doing nothing is even riskier than investing in times of significant inflation.

But it still does not change the fact that investing IS gambling which is the answer to the OP's question.

masonic

There seems to be an implication by several posters that depositing money in a savings account carries zero risk. Clearly that cannot be true. Banks can fail and so can compensation schemes. Is it useful to state saving IS gambling?

Carnival789

jimjames wrote: »

Which is an interesting thought. So for very long term (pension) you understand that investment is a good idea and worth the risk. It would be far more risky to keep pension money in cash for 40 years so it's important to understand risk.

my willingness to contribute to my employers pension scheme is more to do with the fact that for every £1 I put in they put in around £3 themselves. This makes a big difference to how I view the risk/reward ratio.

Linton

berbastrike wrote: »

My point is that the stockmarket is basically a posh betting shop.

There is a fundamental difference. In a betting shop the odds are against you - the more bets you make over an extended period the more likely you are to lose. With investing the odds are stacked in your favour, so the more bets you make by investing in a wide range of assets, and the longer the term you invest in, the more you are likely to win.

A cash account is from that point of view worse than a posh betting shop: over time you are very likely to lose wealth and certain never to make a large profit.

If investing is a posh betting shop so is any other use of cash to buy an asset in the hope or expectation of future gain. Buying a house rather than renting is partaking in posh betting as is a BTL. Paying for a university education is posh betting. Setting yourself up in business is posh betting. No difference between those and buying a % of a company, which is what mainstream investing boils down to.