4 ms·

investing can be quite like gambling psychologically, but it isn't necessarily the same thing. it's just one of the many risk vs. reward tradeoffs inherent to l

investing can be quite like gambling psychologically, but it isn't necessarily the same thing. it's just one of the many risk vs. reward tradeoffs inherent to life. every time I drive to the grocery store, I am implicitly acknowledging that the risk of being t-boned is outweighed by the reward of having food to eat, even though I am not 100% sure that I will survive my journey or that they will have the food I want. another key difference is that the expected value of a bet in gambling is less than or equal to zero (depending on house cut). the expected value of a single stock is unknown (at least to a retail investor), but the expected value of a broad portfolio is positive in a growing economy. you can "lose" relative to others and still be better off than if you had not participated.

timmytokyo 6y ago
It's difficult to call what many of these people do "investing". It's closer to speculating. And speculating is gambling.
- leetcrew 6y ago
  in this case I agree, what these people are doing is effectively gambling. I'm just pushing back on the frustrating meme that "investing is literally gambling". there are definitions of "investing" and "gambling" that can make that sentence true, but they are not particularly useful outside of convincing laypeople not to put their life savings into $TSLA weeklies. it's certainly possible to gamble with stocks and derivatives, but in general, investing and even speculating are not necessarily gambling. imo the difference is in the strategy behind the trades. though wildly risky, speculation can be rational when backed by an advantage in information and/or analysis. a retail investor watching daily prices and backfitting a narrative from news stories is not an example of a rational trading strategy.
  - chii 6y ago
    The difference between speculating and gambling is that when you speculate, you deliberately take on risk (that someone else wants to offload) for a reward. Gambling is taking on a risk to get a reward - the risk isn't offloaded by somebody else. It's set by the house. For example, horse race betting, roulette, or blackjack, is gambling, not speculating. Betting on commodities futures is speculating, not gambling - commodities futures is one way a producer can offload future price fluctuations/risk to somebody else (who "wins"/"loses" if the prices rise/falls).

timmytokyo 6y ago

It's difficult to call what many of these people do "investing". It's closer to speculating. And speculating is gambling.

leetcrew 6y ago
in this case I agree, what these people are doing is effectively gambling. I'm just pushing back on the frustrating meme that "investing is literally gambling". there are definitions of "investing" and "gambling" that can make that sentence true, but they are not particularly useful outside of convincing laypeople not to put their life savings into $TSLA weeklies. it's certainly possible to gamble with stocks and derivatives, but in general, investing and even speculating are not necessarily gambling. imo the difference is in the strategy behind the trades. though wildly risky, speculation can be rational when backed by an advantage in information and/or analysis. a retail investor watching daily prices and backfitting a narrative from news stories is not an example of a rational trading strategy.
- chii 6y ago
  The difference between speculating and gambling is that when you speculate, you deliberately take on risk (that someone else wants to offload) for a reward. Gambling is taking on a risk to get a reward - the risk isn't offloaded by somebody else. It's set by the house. For example, horse race betting, roulette, or blackjack, is gambling, not speculating. Betting on commodities futures is speculating, not gambling - commodities futures is one way a producer can offload future price fluctuations/risk to somebody else (who "wins"/"loses" if the prices rise/falls).