The Differences Between Gambling and Investing
There is a lot of controversy surrounding the idea that gambling is bad. There is some truth to it in that if you put a few dollars on the line at a casino, you are taking a chance. The chances of hitting the jackpot are slim, but even with that small of a chance, your odds of making money on the wager are still pretty good. That being said, there is plenty of money to be made by playing online and this article will explain how. After reading this, you may decide whether or not gambling is really evil.
The problem of many who claim that gambling is evil is that they fail to see how much fun it can be. Gambling is the fun, expendable wagering on something with an unpredictable outcome with the goal of eventually winning something more valuable. Gambling needs three components for it to be valid: risk, consideration, and a bet. If these three things are present, then a gambling problem is sure to arise. However, there is a difference between having a problem gambling and actually placing bets. Placing bets involves both thought and action.
Consider a situation where a gambler expects a positive expected return on his or her gambling investment. This would mean that the gambler does not care about what happens with the investment itself. In this sense, the gambler is considered to have more control over his or her investment than a speculator who does not have this same outlook. In this sense, investing in the stock market can be considered to be gambling when the gambler does not have any concern with what the market will do. A gambler who buys shares of stock as part of a diversified portfolio has no emotional attachment to the company and the investment is purely mechanical. Therefore, he or she will make the same bets whether the market will go up or down.
To determine whether gambling has taken over your investing, look at how much time you are spending looking at the stock market. If all of your time is dedicated to researching and analyzing stocks and determining where they will go next, then you are not gambling. Likewise, if all of your time is spent talking to financial experts and trying to find the best stock picks then you are gambling. The key difference is that you have the option to leave your investing in the hands of professionals should you become completely overwhelmed by your research. However, the more you invest yourself into the process, the more you will likely feel like gambling because you are letting your emotions take control of the process.
The other thing that separates gambling from simply placing a bet is that gambling involves the expectation that the outcome will be good. For instance, if someone is gambling their money on a sports team that has a superstar player joining, then they are gambling that the star will stay with the team and help lead the team to a winning season. Of course, no matter how good the star is, there is no guarantee that he or she will remain with the team for a long period of time, so this is where the gambling comes in.
The final thing that makes gambling and investing different is that many gamblers are okay with losing some of their investments. In fact, many gamblers will even lose part of their portfolio for the chance at making a large profit on a bad stock pick. The reason for this is that the gambler figures that if they are able to get back half of what they lost then they will still have a good return on their investment. Investing in the stock market is similar to gambling in that way. However, while the gambler may feel as though he or she is out fifty percent on a bad stock pick, they can be assured that they will make up for it in the long run.