is the stock or commodities market gambling?

[Felipe]

Well???? Is it gambling??? I mean, what's the difference between say blackjack, stock market trading, hold'em poker, roulette, commodities trading?

[GeorgeF]

Standard answer: Gambling games like poker create risk where there was none until the game started. The stock market redistributes risk that already existed. For example a company owned by an individual goes public, now the risk is shared by more people.

[Non_Comformist]

The differences betweem black jack (absent card counting and program betting) and investing are vasts, the differences between poker (played with sound poker strategy) and investing are subtle.

[midas]

The less you know about an investment you own the more of a gambler your are. The more research you do on a stock you are an investor. If you care more about momemtum and market psycology you are definitely a trader. Traders also like to gamble - its just there nature.

[BadBoyBenny]

There can be a big difference or there can be no difference. Read the first chapter of Ben Graham's Inteligent Investor on the difference between speculation and investing.

[tek]

Good posts so far. I'd like to add that in a sense, everything in life is a gamble. Starting a business is a gamble. Heck, even crossing the street is a gamble. I saw a traffic surveillance video yesterday that showed a car going through a red light, hitting another car and that car veering off and taking out a pedestrian /images/graemlins/mad.gif

Controlling risk is important. Also knowing what game to play is important. Opening a business with no experience is risky. Playing at a higher limit in poker than your experience and bankroll dictates is risky. Playing games you with negative expectation (roulette, craps, baccarat, etc) is plain silly.

Commodities would fall in the last category because of the high degree of leverage, limit up and down days and market factors that the majority of us don't fully comprehend.

Blackjack would be ok if you can count cards, find a one or two deck shoe, play for a half hour and take the money and run. Most people can't do that.

The stock market is good if you have a game plan. Ben Graham and his protoge Buffet bought and held based on financial statements and their knowledge of certain industries. Some people trade using charts.

[Dan Mezick]

The difference is that "the market" is socially acceptable gambling and some other forms are not.

[moondogg]

[ QUOTE ]
The difference is that "the market" is socially acceptable gambling and some other forms are not.

[/ QUOTE ]

The interesting part is that there were probably far more lives (and their families) financial destroyed by "the market" in the last 5 years than by gambling in the last 20 years. IMHO, the main reason is that people refused to believe that they were "gambling" when they were betting on tech stocks.

[tek]

[ QUOTE ]
The interesting part is that there were probably far more lives (and their families) financial destroyed by "the market" in the last 5 years than by gambling in the last 20 years. IMHO, the main reason is that people refused to believe that they were "gambling" when they were betting on tech stocks.

[/ QUOTE ]

So much for "buy-and-hold"... What hurt many people was the fallacy that "times were different" and tech stocks would magically rise forever. Greed kills. /images/graemlins/wink.gif

[meow_meow]

The commodoties market, unless you are using it to hedge, is more or less a gamble.

The stock market may be a gamble, but overall it's gambling with a +EV (and +ve sum).

[Felipe]

[ QUOTE ]
taking out a pedestrian /images/graemlins/mad.gif

[/ QUOTE ]
do you mean killed?

[tek]

Yes, the car that was hit spun around and slid into the pedestrian. He had no time to escape.

[Felipe]

I agree that greed kills. Thanks for all the ideas. Now I can have a chat with my dad about his "gambling" /images/graemlins/wink.gif hahaha

[sofere]

[ QUOTE ]
The differences betweem black jack (absent card counting and program betting) and investing are vasts, the differences between poker (played with sound poker strategy) and investing are subtle.

[/ QUOTE ]

Very well put. I'd like to try and expand on the similarities btwn poker and investing.
The main similarity I think is that the people who know what their doing and can analyze and interpret the given information well consistently take advantage of those who can't.
Poker and investing are both zero sum games...one person's gain is always, without fail, another person's loss (although as in tourney play one might choose to take the loss if the risk does not fit in with their long term strategy).
Brokers fees/commissions = rake.

This is where i'm gonna get creative. Each pocket hand is like a stock, each player owning stocks in competing industries. The community cards are like new news on those stocks, and the way other people bet is like the market reaction to that news.

Okay I may have been a little over the top on the last one, but thats just my take /images/graemlins/grin.gif

[sfer]

[ QUOTE ]
Standard answer: Gambling games like poker create risk where there was none until the game started. The stock market redistributes risk that already existed. For example a company owned by an individual goes public, now the risk is shared by more people.

[/ QUOTE ]

Good answer. Add that the market isn't zero sum while casino games are, and I think we're done here.