Is there a hard threshold? Do high risk investments such as penny stocks qualify as gambling? Do low risk investments? Annuities? Bonds? CDs?
This comment got me wondering.
Is it more to do with the venue? Stock markets and real estate vs casinos and the lottery?
Were the MIT Blackjack Team gambling or investing?
Is this just another semantic hotdogs are sandwiches discussion or is there an agreed threshold?
I do call my small basket of individual stocks gambling (it is a couple hundred bucks, loses value overall, just like gambling) and the 401k I call “investing”.
I do think investing in general is speculative though, so yeah I consider it gambling. Not bonds, but stocks yes.
I’d say that it is always gambling because there is risk involved.
But I would say that both traditional gambling and investments have the same threshold for problematic behaviour, and that is when you spend more money than you can afford to lose. That is regardless whether you win or not.
If its fun or get rich quick. Gambling.
If it’s some boring thing some adviser told you that you are sick of, that you then told your family and they are sick of it. You just going to leave it and forget about it. Then it’s investing.
Any time you spend money on the chance to make money, it’s gambling, IMO.
Lottery ticket? Gambling. Buying stock? Gambling. Sports betting? Buying into a poker game? Believe it or not, gambling (which is the only gambling I’ll personally do since the game is still enjoyable even if I lose).
Spreading out stock purchases across the market guarantees returns over the long run.
Buying one stock is gambling, buying a wide spread of stocks (or an index fund that does so) and holding them for years is investing.
"Gambling " is so meaningless in this context.
I gamble with my life when I drive to the shops.
When you put your money in the bank, theres’ a chance you’ll make some interest, there’s a chance you’ll make a little more interest. Does that make it gambling?
Every day I wake up I gamble if I’ll enjoy it or not.
When I feel I shouldn’t and I do it anyway.
Short term intent is gambling. Long term is investing.
If you’re trying to make money today, this week, the next quarter, year. You’re gambling.
If you buy into something, intending to stay in it for a long time (think years and decades) you’re investing.It becomes gambling when you are going on gut feelings without researching what you’re doing.
If you have an investment strategy that financial advisors approve of, let’s say investing 70% in a US index fund, 20% bonds and 10% high risk mutual funds that you don’t touch for years or decades, that’s investing.
If you’re just randomly picking stocks, buying and selling in order to make a quick buck because of some guy screaming at you on television without any real research into a company other than a few google searches, that’s gambling.
I want to remind everyone that there is no guarantee that the market / index funds continue to go up. It hasn’t happened in the US market, but look at the Nikkei over the last 30 years - if you had invested in the 90s you would only now be getting some of your money back - that is a long time.
I feel you have literally picked the single most unique example for markets not going up. You make it seem like the US’s market will need to experience the same thing eventually, and I don’t think most people would agree with that assertion. Japan’s economy is a very strange and unique case.
You make it seem like the US’s market will need to experience the same thing eventually.
You make it seem like it didn’t already: The US market didn’t reach its 1929 peak again until 1954. 25 years is a long time to hold out on withdrawing your retirement investments.
Here’s two other modern markets:
The Athens Stock Exchange had peaks in the 2000’s that haven’t recovered.
Ukraine’s stock market has ceased operations since the invasion.
These events are rare, but not unheard of.
IMO: When you do it for the entertainment/feeling/rush, it’s gambling. When you do it for the returns, it is investing. I also think the other poster that mentioned investing as being interested in the success of the endeavor, that would exclude shorting and I think might be a useful distinction.
Casino games and sports betting all have lower expected value (probabilistic value) than their cost, so they are not something you can do for returns (you have better expected returns by not participating).
There are plenty of people that are misinformed, dishonest, or stuck finding a bigger fool that will sell you a gamble by calling it an investment, and expected value is not guaranteed value.
If you’re talking about stock picking, hard disagree. Emotion has nothing to do with it whether or not it’s gambling.
If picking stocks was anything but a gamble portfolio managers wouldn’t have such a god awful track record.
Just because you are wrong about your expected value calculations (or were right but the actual return was on the lower end of the range) and have made a bad investment doesn’t change the fact that it was an investment because you were doing it for the returns.
In short, performance doesn’t matter for this distinction, at least IMO.
You can dress it up in whatever language you want but when nobody is able to consistently beat the market it looks a hell of a lot like gambling.
The DJIA (e.g.) isn’t “the house”. It isn’t something you are competing with in that your losses are its/their gain. You are misunderstanding both investing (in general and the stock market specifically) and gambling when you make that confusion/analogy.
Not beating the market but having positive returns is only “losing” when infinite exponential growth is the goal. Beating the market but having negative returns is not “winning”.
