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The problem is options/derivatives trading. That is straight up gambling. There’s a meta market where you bet on the behavior of the market...

by dcow 6y ago

kqr 6y ago
While that is a large part of it, it also seems like an unfair simplification, for two reasons: 1. You can construct portfolios of derivatives that are almost equivalent to holding the underlying except at a smaller initial cost. This gives you nothing but flexibility in ownership. 2. Remember that fire insurance is also straight up gambling that your house will burn down. Gambling counter to your interests is what we call insurance, and the proper mix of underlying and derivative is a hedged, lower risk portfolio than just the underlying.
hattmall 6y ago
It is ALL gambling, options are just another instrument, they can make your gamble more risky or less risky depending on how you use them. Except in very rare cases stocks are entirely based on what investors think someone else is willing to pay in the future.
- dcow 6y ago
  When I buy TSLA stock I’m not gambling on the future of Tesla. I’m investing in electric vehicles. So it’s “value investing” insofar as that’s my motive for investing. Sure I could gamble with plain stocks in the market, but thats not my motive or goal. Others, sure. Of course stocks are based on what investors think they’re worth. Thats the whole point. It’s not gambling. Tesla is worth a lot of money because people think it is. If you’re susceptible to fomo hype trains and looking for a quick buck, you’re looking at the market as a slot machine, no doubt. Stocks pay owners other than their value in the market, too. Capitalists look to make money off the market. It doesn't mean it’s all gambling. That’s a little reductive.
Der_Einzige 6y ago
When gambling, the house "always wins" over time. With options trading, that's not always the case. Anyone with a gambling addiction would be far better off doing options trading - their chances are much better.

The problem is options/derivatives trading. That is straight up gambling. There’s a meta market where you bet on the behavior of the market...

by dcow 6y ago

The problem is options/derivatives trading. That is straight up gambling. There’s a meta market where you bet on the behavior of the market...

kqr 6y ago

While that is a large part of it, it also seems like an unfair simplification, for two reasons: 1. You can construct portfolios of derivatives that are almost equivalent to holding the underlying except at a smaller initial cost. This gives you nothing but flexibility in ownership. 2. Remember that fire insurance is also straight up gambling that your house will burn down. Gambling counter to your interests is what we call insurance, and the proper mix of underlying and derivative is a hedged, lower risk portfolio than just the underlying.

hattmall 6y ago

It is ALL gambling, options are just another instrument, they can make your gamble more risky or less risky depending on how you use them. Except in very rare cases stocks are entirely based on what investors think someone else is willing to pay in the future.

dcow 6y ago
When I buy TSLA stock I’m not gambling on the future of Tesla. I’m investing in electric vehicles. So it’s “value investing” insofar as that’s my motive for investing. Sure I could gamble with plain stocks in the market, but thats not my motive or goal. Others, sure. Of course stocks are based on what investors think they’re worth. Thats the whole point. It’s not gambling. Tesla is worth a lot of money because people think it is. If you’re susceptible to fomo hype trains and looking for a quick buck, you’re looking at the market as a slot machine, no doubt. Stocks pay owners other than their value in the market, too. Capitalists look to make money off the market. It doesn't mean it’s all gambling. That’s a little reductive.

Der_Einzige 6y ago

When gambling, the house "always wins" over time. With options trading, that's not always the case. Anyone with a gambling addiction would be far better off doing options trading - their chances are much better.