5 ms·

I bet the better off do gamble on the financial markets though

by 331c8c71 1y ago

kelseyfrog 1y ago
When they do it, it's gambling. When we do it, it's investing.
- nine_k 1y ago
  Investing is putting money into (hopefully) productive use, like a company with revenue, in an expectation of a return. Gambling is basically redistributing money according to a random numbers generator, It's a negative sum game (because the house takes its fee), but a surprise positive spike game. That spike forms an addiction in the less fortunate.
  - ryandrake 1y ago
    When you buy a stock, you're not contributing it to the company's productive use. If I buy $1000 of MSFT, Microsoft doesn't get an extra $1000 in their bank account to invest in their business. That $1000 is going to another bettor to settle his previous bet, and at some point in the future, I'll sell and get an unknown amount of money to settle my bet. Just because historically betting on the stock market has been +EV doesn't mean it's not still gambling.
    - JumpCrisscross 1y ago
      > When you buy a stock, you're not contributing it to the company's productive use You are marginally reducing their cost of capital.
      - ryandrake 1y ago
        Sure, but that's pretty indirect and a far cry from "putting the money to productive use." Unless you're an early investor or IPO participant, your actual money is not being directly put to productive use by the company you are "investing" in.
        JumpCrisscross 1y ago
        > that's pretty indirect and a far cry from "putting the money to productive use." All finance is indirect. Particularly at small scale. > Unless you're an early investor or IPO participant Plenty of IPOs are entirely secondary. And public companies regularly raise money via at-the-market offerings, where a random trader may wind up cutting a cheque to the corporate treasury. (I’ve been a seed investor and IPO investor. My effects on the outcome were rarely singularly meaningful.) In a large offering, a small IPO investor has about as much direct effect on the outcome as someone buying the pop publicly. In aggregate, however, their actions are meaningful and productive. Put another way: contrast two economies, one in which most capital is tied up sports gambling (negative-sum game), the other in which it’s in equities (positive-sum long term), one will outperform the other.
        jowea 1y ago
        Early investors and IPO participants put their money in expecting that 20 years later you would buy the stock off their hands. It feels weird to call it causation when it's traveling back in time, but in a way buying the stock contributes to investment.
    - jogjayr 1y ago
      If you buy MSFT specifically you'll get regular, fairly predictable dividend payments and not just an unknown amount of money in the future. MSFT goes up a tiny fraction when you buy. That means MSFT employees with stock grants get a tiny "raise" courtesy of you and with no cost to the company. Microsoft can also use their more expensive stock to make acquisitions. So you are contributing to the company's productive use in at least 2 ways if you buy its stock. Buying MSFT doesn't meet the criteria to be called gambling, for me.
  - JumpCrisscross 1y ago
    > Investing is putting money into (hopefully) productive use, like a company with revenue, in an expectation of a return The big differences are time horizon, addiction and expectations. The longer the term, the less actively one must watch it and the lower the expected returns, the more likely it’s investing. The shorter the expected turnaround, the more closely one watches numbers go up and down, and the more one is focused on turning multiples than yields, the more likely it’s gambling. Any stochastic process can produce gambling behaviour. Only a positive-sum game can facilitate investing.
- victorbjorklund 1y ago
  The difference is investing has a positive expected return. Betting against the house does not.
  - kelseyfrog 1y ago
    > investing has a positive expected return Can you tell me more about this. I've never heard of it before. Is there a theorem?
tstrimple 1y ago
Plus it's fun and "dangerous" to slum it with the plebs on occasion. But you don't want that shit close to where you live.
psychoslave 1y ago
Those who already took 99% of the pie can safely bet on every possible outcome. Most can avoid to lose completely while alive, but they have no path to a winning position, and others are trapped in a situation where it's so hard to go down to a net lost that they lose ability to understand that individual hard work and wiseness is not going to defeat societal asymetries.
SXX 1y ago
Except everyone on financial markets try to sell idea that you can "learn" and actively trade on their platforma and make living of it. Which make it no diffetent for average Joe than gambling.
garbawarb 1y ago
Financial markets produce a net positive outcome for investors (gamblers), no? The average rate of return in the S&P500 is about 10% and it's considered the baseline for thr stock market.
- ceejayoz 1y ago
  The gambling equivalent is day trading, not holding VOO for a decade.
prewett 1y ago
There are many ways to use the financial markets that are not gambling. Buying an index fund or Coca-Cola isn’t gambling; it is not even very risky. Nor are individual stocks gambling, as you can get a reasonable idea of what a company’s price ought to be and how it is likely to perform in the future, at least for well-established companies. It’s also harder to get into debt, as long as you don’t short, because you can only spend money you have, and the stock does not become worthless if your analysis is wrong. (At least, there are warning signs) Now day-trading? I consider that gambling, because any particular day’s price movement is a lot closer to random.
- ryandrake 1y ago
  Buying a stock or mutual fund is the very definition of gambling: placing a monetary bet on an unknown future event. Just because this activity has historically had a +EV, doesn't make it any less gambling.
  - fngjdflmdflg 1y ago
    By this definition prime loans are also gambling. When you bet on something risky then you are gambling. When you bet on something not risky you are not gambling. Also consider that not investing will generally lose money over time due to things like inflation. If we define the goal to be holding as much value as we can, holding dollars is more risky than investing in many stocks (or bonds, which also have a risk of defaulting). A better definition of gambling is something like "taking unnecessary and unproductive risks."
    - ryandrake 1y ago
      I'm not sure I buy any definition of gambling that depends on the outcome. If you lose money or tend to lose money, then it's gambling, but if you win money or tend to win money, then we change the name to "investing?" Risk includes upside and downside risk.
      - fngjdflmdflg 1y ago
JumpCrisscross 1y ago
> bet the better off do gamble on the financial markets though Much less. Something I’ve noticed is the parents of the wealthy teaching their children to invest versus e.g. day trade. In middle class or poor households, on the other hand, it’s not uncommon for the kid to be trading crypto instead.
xphos 1y ago
This is a misleading judgment the expectations out of the stock market being that the investments produce money generally speaking are expectation positive. Gambling is expectation negative always. That's the defining difference in my opinion. Can you lose money in both absolutely but only actual investments have historically positive expectations. The stock market has had net growth of 7%+ on average in the last 100 years. Gambling has not increased the gamblers pockets at all its only shrunk there pockets

I bet the better off do gamble on the financial markets though

kelseyfrog 1y ago

When they do it, it's gambling. When we do it, it's investing.

nine_k 1y ago
Investing is putting money into (hopefully) productive use, like a company with revenue, in an expectation of a return. Gambling is basically redistributing money according to a random numbers generator, It's a negative sum game (because the house takes its fee), but a surprise positive spike game. That spike forms an addiction in the less fortunate.
- ryandrake 1y ago
  When you buy a stock, you're not contributing it to the company's productive use. If I buy $1000 of MSFT, Microsoft doesn't get an extra $1000 in their bank account to invest in their business. That $1000 is going to another bettor to settle his previous bet, and at some point in the future, I'll sell and get an unknown amount of money to settle my bet. Just because historically betting on the stock market has been +EV doesn't mean it's not still gambling.
  - JumpCrisscross 1y ago
    > When you buy a stock, you're not contributing it to the company's productive use You are marginally reducing their cost of capital.
    - ryandrake 1y ago
      Sure, but that's pretty indirect and a far cry from "putting the money to productive use." Unless you're an early investor or IPO participant, your actual money is not being directly put to productive use by the company you are "investing" in.
      - JumpCrisscross 1y ago
        > that's pretty indirect and a far cry from "putting the money to productive use." All finance is indirect. Particularly at small scale. > Unless you're an early investor or IPO participant Plenty of IPOs are entirely secondary. And public companies regularly raise money via at-the-market offerings, where a random trader may wind up cutting a cheque to the corporate treasury. (I’ve been a seed investor and IPO investor. My effects on the outcome were rarely singularly meaningful.) In a large offering, a small IPO investor has about as much direct effect on the outcome as someone buying the pop publicly. In aggregate, however, their actions are meaningful and productive. Put another way: contrast two economies, one in which most capital is tied up sports gambling (negative-sum game), the other in which it’s in equities (positive-sum long term), one will outperform the other.
      - jowea 1y ago
        Early investors and IPO participants put their money in expecting that 20 years later you would buy the stock off their hands. It feels weird to call it causation when it's traveling back in time, but in a way buying the stock contributes to investment.
  - jogjayr 1y ago
    If you buy MSFT specifically you'll get regular, fairly predictable dividend payments and not just an unknown amount of money in the future. MSFT goes up a tiny fraction when you buy. That means MSFT employees with stock grants get a tiny "raise" courtesy of you and with no cost to the company. Microsoft can also use their more expensive stock to make acquisitions. So you are contributing to the company's productive use in at least 2 ways if you buy its stock. Buying MSFT doesn't meet the criteria to be called gambling, for me.
- JumpCrisscross 1y ago
  > Investing is putting money into (hopefully) productive use, like a company with revenue, in an expectation of a return The big differences are time horizon, addiction and expectations. The longer the term, the less actively one must watch it and the lower the expected returns, the more likely it’s investing. The shorter the expected turnaround, the more closely one watches numbers go up and down, and the more one is focused on turning multiples than yields, the more likely it’s gambling. Any stochastic process can produce gambling behaviour. Only a positive-sum game can facilitate investing.
victorbjorklund 1y ago
The difference is investing has a positive expected return. Betting against the house does not.
- kelseyfrog 1y ago
  > investing has a positive expected return Can you tell me more about this. I've never heard of it before. Is there a theorem?

tstrimple 1y ago

Plus it's fun and "dangerous" to slum it with the plebs on occasion. But you don't want that shit close to where you live.

psychoslave 1y ago

Those who already took 99% of the pie can safely bet on every possible outcome. Most can avoid to lose completely while alive, but they have no path to a winning position, and others are trapped in a situation where it's so hard to go down to a net lost that they lose ability to understand that individual hard work and wiseness is not going to defeat societal asymetries.

SXX 1y ago

Except everyone on financial markets try to sell idea that you can "learn" and actively trade on their platforma and make living of it. Which make it no diffetent for average Joe than gambling.

garbawarb 1y ago

Financial markets produce a net positive outcome for investors (gamblers), no? The average rate of return in the S&P500 is about 10% and it's considered the baseline for thr stock market.

ceejayoz 1y ago
The gambling equivalent is day trading, not holding VOO for a decade.

prewett 1y ago

There are many ways to use the financial markets that are not gambling. Buying an index fund or Coca-Cola isn’t gambling; it is not even very risky. Nor are individual stocks gambling, as you can get a reasonable idea of what a company’s price ought to be and how it is likely to perform in the future, at least for well-established companies. It’s also harder to get into debt, as long as you don’t short, because you can only spend money you have, and the stock does not become worthless if your analysis is wrong. (At least, there are warning signs) Now day-trading? I consider that gambling, because any particular day’s price movement is a lot closer to random.

ryandrake 1y ago
Buying a stock or mutual fund is the very definition of gambling: placing a monetary bet on an unknown future event. Just because this activity has historically had a +EV, doesn't make it any less gambling.
- fngjdflmdflg 1y ago
  By this definition prime loans are also gambling. When you bet on something risky then you are gambling. When you bet on something not risky you are not gambling. Also consider that not investing will generally lose money over time due to things like inflation. If we define the goal to be holding as much value as we can, holding dollars is more risky than investing in many stocks (or bonds, which also have a risk of defaulting). A better definition of gambling is something like "taking unnecessary and unproductive risks."
  - ryandrake 1y ago
    I'm not sure I buy any definition of gambling that depends on the outcome. If you lose money or tend to lose money, then it's gambling, but if you win money or tend to win money, then we change the name to "investing?" Risk includes upside and downside risk.
    - fngjdflmdflg 1y ago

JumpCrisscross 1y ago

> bet the better off do gamble on the financial markets though Much less. Something I’ve noticed is the parents of the wealthy teaching their children to invest versus e.g. day trade. In middle class or poor households, on the other hand, it’s not uncommon for the kid to be trading crypto instead.

xphos 1y ago

This is a misleading judgment the expectations out of the stock market being that the investments produce money generally speaking are expectation positive. Gambling is expectation negative always. That's the defining difference in my opinion. Can you lose money in both absolutely but only actual investments have historically positive expectations. The stock market has had net growth of 7%+ on average in the last 100 years. Gambling has not increased the gamblers pockets at all its only shrunk there pockets