On… Gambling


Tell someone that you bought a property and he replies “It’s good that you’re investing and thinking about the future”. Tell someone that you bought some stocks and he replies “Why are you gambling with your hard earned money?”. Not always, but most of the time.    


So why is buying property considered as investing; but buying stocks considered as gambling? I guess it depends on the definition of gambling. Ask ten different people and most probably you will get ten different answers. Personally, I think as long as your action has an uncertainty in its outcome, it should be somewhat considered gambling (and its not only financial terms that we should consider).  


You drive your car to work. There’s always a probability that you end up in an accident. You’re gambling with your life.


You start a business. There’s always a probability you go bankrupt. You’re gambling with your money.


You take an airplane to travel for vacation. There’s always a probability that the plane crashes. You’re gambling with your life.


The list goes on. Maybe everything we do in life is some sort of gamble (as we can never be certain of an outcome?). Perhaps its true but the reason we don’t realise/feel it is because we usually act only when the probability of a good outcome is high. What do I mean?


You drive your car but usually in a sober state (but there are many that drive drunk). That increases the probability that you reach your destination safely.


You start a business but after doing your necessary due diligence and research. That increases the probability that the business will go well.


You take an airplane to travel but choose an airline with a good safety record. That increase the probability of a safe flight.


Defined this way, I guess it’s not wrong to say that buying stocks is gambling. But like all the other gambles that you take every day; you should gamble well – i.e. you should do it only when the probability of a good outcome is high. In that way, buying stocks will feel a lot less like gambling.

Comments

  1. I guess what you're trying to say is if the risk is calculated properly and you act upon the calculated risk, it will be less of a gamble.
    Gambling is more like a form of trying one's luck without much of a thought and the addiction of gambling which is dangerous is when the person lose control of himself even when losing thinking that he can win everything back.

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