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Gambling is when the economic activity is zero-sum -- there is a loser exactly equal to the winner. Investment puts money to work so the effect is their is mor

Gambling is when the economic activity is zero-sum -- there is a loser exactly equal to the winner. Investment puts money to work so the effect is their is more real wealth in the world. For example, a farmer buys an irrigation system with a small business loan -- now there is more food in the world. A homeowner uses a home equity loan to insulate his house -- now there is more energy in the world. Contrast this with a casino developing super-slots with a $1 million payout. The casino might increase their take, but their is no increase of real wealth in the world.

arethuza 16y ago
Well, if I go out and buy some stock in a publicly traded company post IPO the company won't see any of my money it will simply go to someone who purchase it from its current owner.
- asmithmd1 16y ago
  I agree, if you "invest" for a few months or days you are just gambling. Check out this post on where to put your money now -- this is not a scam therefore it is not easy, or risk free: http://scottlocklin.wordpress.com/2010/11/20/investments-for-dummies/ http://scottlocklin.wordpress.com/2010/11/20/investments-for...
- yummyfajitas 16y ago
  If there was no secondary market, the company would receive far less money at the IPO. Liquidity is very valuable. Compare the more and less liquid shares in Chipotle - the only difference between CMG and CMG.B is that CMG.B has more voting rights, but less liquidity. http://www.google.com/finance?chdnp=1&chdd=1&chds=1&chdv=0&chvs=Logarithmic&chdeh=0&chfdeh=0&chdet=1232744400000&chddm=209732&chls=IntervalBasedLine&cmpto=NYSE:CMG.B&cmptdms=0&q=NYSE:CMG&ntsp=0 http://www.google.com/finance?chdnp=1&chdd=1&chds=1&...
  - arethuza 16y ago
    Sorry - I was really thinking about the definition of "gambling" and "investing" above. So perhaps using that terminology the original investors at an IPO are willing to do so expecting liquidity based on the willingness of others to gamble on the stock. Or something like that :-).

arethuza 16y ago

Well, if I go out and buy some stock in a publicly traded company post IPO the company won't see any of my money it will simply go to someone who purchase it from its current owner.

asmithmd1 16y ago
I agree, if you "invest" for a few months or days you are just gambling. Check out this post on where to put your money now -- this is not a scam therefore it is not easy, or risk free: http://scottlocklin.wordpress.com/2010/11/20/investments-for-dummies/ http://scottlocklin.wordpress.com/2010/11/20/investments-for...
yummyfajitas 16y ago
If there was no secondary market, the company would receive far less money at the IPO. Liquidity is very valuable. Compare the more and less liquid shares in Chipotle - the only difference between CMG and CMG.B is that CMG.B has more voting rights, but less liquidity. http://www.google.com/finance?chdnp=1&chdd=1&chds=1&chdv=0&chvs=Logarithmic&chdeh=0&chfdeh=0&chdet=1232744400000&chddm=209732&chls=IntervalBasedLine&cmpto=NYSE:CMG.B&cmptdms=0&q=NYSE:CMG&ntsp=0 http://www.google.com/finance?chdnp=1&chdd=1&chds=1&...
- arethuza 16y ago
  Sorry - I was really thinking about the definition of "gambling" and "investing" above. So perhaps using that terminology the original investors at an IPO are willing to do so expecting liquidity based on the willingness of others to gamble on the stock. Or something like that :-).