4 ms·
It's a common refrain, but I don't agree that it's correct. You're essentially boiling the definition down to the degree of risk: If (risk > some_threshold) th
by jbstack 2mo ago
It's a common refrain, but I don't agree that it's correct. You're essentially boiling the definition down to the degree of risk:
If (risk > some_threshold) then gambling = true; else gambling = false;
With derivatives your risk is often greater than with traditional stocks. But that's not universally true. If you invest in a startup your risk is massive, whereas if you invest in a well diversified and low leveraged portfolio of derivatives your risk might be substantially lower.
And in any case, so what? If you place a small bet on every number of a roulette table your risk is essentially zero: you'll simply make a guaranteed fixed loss of 5.26% on every spin. On the other hand, if you invest in the Vanguard Total Stock Market index tracker, you might hope to make around 8 to 10% per year, but in some years (e.g. 2008) you might make a big loss (37%), so the risk is significant. Yet I think most people would agree that the former is gambling while the latter is not.
The important factor isn't how much risk you take on, it's whether a sufficiently skilled person can achieve a positive mathematical expectation over a series of similar bets.
- mschuster91 2mo ago> You're essentially boiling the definition down to the degree of risk Indeed, but I'm not alone in making this decision, it's a common thing in the finance world, known there as "accredited investor" [1]. Generally, the distinction between gambling and investing (a fine line that especially Kalshi and Polymarket are attempting to walk, by the way) often is "can the investor / gambler influence the outcome of the investment by knowledge". Say, a stock like GME... the initial analysis by DFV clearly was investment, based on very thorough research. The Army of the Apes however that m00ned the stonk? That was pure degenerate gambling, with the point not being profits but hedgefunds closing down. [1] https://en.wikipedia.org/wiki/Accredited_investor https://en.wikipedia.org/wiki/Accredited_investor
- wpietri 2mo agoI think a more effective definition involves socially productive activity. If support the creation of value to others in hopes of getting paid back over time through getting a fraction of the value created, that's investing. If I put money into something volatile in hope that I get more money out, that's gambling. Alternately, you could frame it in terms of positive sum vs zero/negative sum systems. The former is investing, the latter gambling.