6 ms·

This mentality is why so many people stay poor.

UncleOxidant 1y ago
How would you convince people that they aren't gambling when investing in stocks? It's easy to say that this fear will keep them poor, but how would you alleviate their fears? There certainly do seem to be features of the current market that seem quite akin to gambling. Are current price/earnings ratios warranted? What about market manipulation by tweets that we see from the current administration? It seems that insiders that are privy to certain information will do much better than your average investor. At some point, people don't want to be suckers and decide to no longer participate.
- bombcar 1y ago
  The best argument I've been able to find is when they're offered a company match in their 401(k) or similar. Basically - total market index funds have very low cost, and the entire market has very rarely gone down 50%, and eventually recovered. Since your company is matching you 50% (or 100%) on your contributions, if the market goes down you're losing "house money/free money" you wouldn't have otherwise. Then after years and years they just get used to it.
- psunavy03 1y ago
  Because gambling is ultimately just betting on a random number generator that's actively weighted against you. Investing is betting on the competence of an executive team to run a business. One of these, you have no control over. The other one is a win-win situation. If the business does well, you do well. It's like saying that because your sibling or friend ended up in a shitty relationship that you need to be celibate for your entire life . . . no, you don't. Just because Company A blew up doesn't mean Company B will. And to be clear, I'm not a fan of stock picking as a core investment strategy, but I'm talking about dollar-cost averaging in equities (low-cost index funds) as opposed to stashing cash under the bed. Long-term, betting on the economy is free money.
  - UncleOxidant 1y ago
    > Investing is betting on the competence of an executive team to run a business. One of these, you have no control over. But again, you're asking people to have a lot of trust in this executive team. Unless we have the legal and regulatory framework that can enforce that trust it all becomes very sketchy. And right now it seems like the legal and regulatory frameworks are under attack. It's becoming more a game of "who you know" and favor currying. That kind of erosion of trust is really dangerous for the markets.
  - coldpie 1y ago
    > as opposed to stashing cash under the bed. There are more options than this. My savings account gives something above 4.5%, and if that rate does go down, there's CDs and stuff like that. And I assure you, I'm not poor, lol :)
    - ryandrake 1y ago
      > My savings account gives something above 4.5% Have you checked recently? Short term Treasury yields are hovering around 4% now, so I'd be surprised if HYSAs are yielding more than that today.
      - coldpie 1y ago
        You're right, looks like it's 4.25% at the moment. It's not something I check on much.
    - psunavy03 1y ago
      With a strategy like that, you're still not going to be nearly as rich as you could be, but you do you.
      - coldpie 1y ago
        I already have more money than I know what to do with. I'd rather spend my time on things I enjoy (arguing on HN) than things I hate (understanding or caring about the stock market).
- saltcured 1y ago
  It may not be possible, but you need to get people to realize that thinking in absolutes is not principled, it is naive. All of our existence involves gambling in the sense of balancing probabilistic risks. You need something more nuanced to distinguish gambling (the moral vice) from risk management (the inescapable survival tool).
- bregma 1y ago
  > How would you convince people that they aren't gambling when investing in stocks? Same way you convince them betting on the ponies is not gambling. If you pick a sure thing you're guaranteed to make money. All you need is a system.
- throw0101b 1y ago
  > How would you convince people that they aren't gambling when investing in stocks? How about: > But in a casino the longer you play, the higher your chances of walking away a loser since the house has the edge. > The stock market is the opposite of a casino. The longer you play, the higher your odds of success in terms of experiencing positive returns on your capital. * https://awealthofcommonsense.com/2023/05/the-stock-market-is-not-a-casino/ https://awealthofcommonsense.com/2023/05/the-stock-market-is... * https://www.cfainstitute.org/insights/articles/investing-vs-gambling https://www.cfainstitute.org/insights/articles/investing-vs-...

How would you convince people that they aren't gambling when investing in stocks? It's easy to say that this fear will keep them poor, but how would you alleviate their fears? There certainly do seem to be features of the current market that seem quite akin to gambling. Are current price/earnings ratios warranted? What about market manipulation by tweets that we see from the current administration? It seems that insiders that are privy to certain information will do much better than your average investor. At some point, people don't want to be suckers and decide to no longer participate.

bombcar 1y ago
The best argument I've been able to find is when they're offered a company match in their 401(k) or similar. Basically - total market index funds have very low cost, and the entire market has very rarely gone down 50%, and eventually recovered. Since your company is matching you 50% (or 100%) on your contributions, if the market goes down you're losing "house money/free money" you wouldn't have otherwise. Then after years and years they just get used to it.
psunavy03 1y ago
Because gambling is ultimately just betting on a random number generator that's actively weighted against you. Investing is betting on the competence of an executive team to run a business. One of these, you have no control over. The other one is a win-win situation. If the business does well, you do well. It's like saying that because your sibling or friend ended up in a shitty relationship that you need to be celibate for your entire life . . . no, you don't. Just because Company A blew up doesn't mean Company B will. And to be clear, I'm not a fan of stock picking as a core investment strategy, but I'm talking about dollar-cost averaging in equities (low-cost index funds) as opposed to stashing cash under the bed. Long-term, betting on the economy is free money.
- UncleOxidant 1y ago
  > Investing is betting on the competence of an executive team to run a business. One of these, you have no control over. But again, you're asking people to have a lot of trust in this executive team. Unless we have the legal and regulatory framework that can enforce that trust it all becomes very sketchy. And right now it seems like the legal and regulatory frameworks are under attack. It's becoming more a game of "who you know" and favor currying. That kind of erosion of trust is really dangerous for the markets.
- coldpie 1y ago
  > as opposed to stashing cash under the bed. There are more options than this. My savings account gives something above 4.5%, and if that rate does go down, there's CDs and stuff like that. And I assure you, I'm not poor, lol :)
  - ryandrake 1y ago
    > My savings account gives something above 4.5% Have you checked recently? Short term Treasury yields are hovering around 4% now, so I'd be surprised if HYSAs are yielding more than that today.
    - coldpie 1y ago
      You're right, looks like it's 4.25% at the moment. It's not something I check on much.
  - psunavy03 1y ago
    With a strategy like that, you're still not going to be nearly as rich as you could be, but you do you.
    - coldpie 1y ago
      I already have more money than I know what to do with. I'd rather spend my time on things I enjoy (arguing on HN) than things I hate (understanding or caring about the stock market).
saltcured 1y ago
It may not be possible, but you need to get people to realize that thinking in absolutes is not principled, it is naive. All of our existence involves gambling in the sense of balancing probabilistic risks. You need something more nuanced to distinguish gambling (the moral vice) from risk management (the inescapable survival tool).
bregma 1y ago
> How would you convince people that they aren't gambling when investing in stocks? Same way you convince them betting on the ponies is not gambling. If you pick a sure thing you're guaranteed to make money. All you need is a system.
throw0101b 1y ago
> How would you convince people that they aren't gambling when investing in stocks? How about: > But in a casino the longer you play, the higher your chances of walking away a loser since the house has the edge. > The stock market is the opposite of a casino. The longer you play, the higher your odds of success in terms of experiencing positive returns on your capital. * https://awealthofcommonsense.com/2023/05/the-stock-market-is-not-a-casino/ https://awealthofcommonsense.com/2023/05/the-stock-market-is... * https://www.cfainstitute.org/insights/articles/investing-vs-gambling https://www.cfainstitute.org/insights/articles/investing-vs-...