In The General Theory of Employment, Interest, casino problems MoneyJohn Maynard Keynes defined speculation as "the activity of forecasting the invest gambling of the market", and speculative motive as "the object of securing profit from knowing better than the market with the future will bring.
If you're sufficiently motivated, I encourage you to try to define the terms 'gambling' and 'investing' before you continue reading this essay If more people start to view buying and selling stocks online as a way to get the betting rush that previously required a trip to a casino, is there any reason to think the same negative consequences that follow gambling won't also follow investing?
Investing is a continuous process of deployment of capital in search of continually increasing net worth.
In general, I'm in favor of less regulation and more disclosure for both activities described as gambling and those described as investing, but I'm no expert on the subject and a thorough discussion is beyond the scope of this essay. It feels right to call such behavior gambling. As Brad Hill has said, "Global financial markets represent the greatest spectator sport humanity has ever devised.
Gambling, on the other hand, is not so clearly making a positive contribution. We recommend that you get assistance from a professional before doing anything you don't know how to do.
Investing addiction is as serious as gambling addiction, and should be treated as such. Invest gambling it doesn't really matter what definitions you use, as long as you and the person s you're communicating with are clear about what is meant by those words.
But perhaps a better interpretation would rest on the realization that different investors have different tolerances for risk. Similarly, there's a big difference between buying exotic derivatives to hedge against an existing risk or position and buying the same derivatives because you saw a web site touting them. If you expect to invest gambling your money quickly, whatever you're doing is probably gambling, even if it happens on Wall Street rather than in Las Vegas.
Investing is a continuous process; gambling is an immediate event or series of events. If you go for all or nothing, you're a gambler.
Gambling is entertainment, investing is business. It might not be such a stretch to call professional gamblers 'investors' and recreational investors 'gamblers'.
Those who have ethical problems or religious issues with gambling or even investing owe it to themselves to figure out exactly what they object to and why. I spent one summer during college working in Arizona, and I drove up to Nevada most weekends to play blackjack. Conclusions So what's my resolution to this definition conundrum? Investors aren't merely betting on which companies will succeed, they're providing the capital those companies need to accomplish their goals.
What definitions did you come up with? Investing is the ownership of something tangible; gambling isn't. An option is a derivative that gives the owner the right to buy or sell a specific amount of a given security at a specified price during a specified period of time.
No similar problem is generally thought to exist in investing. Expert poker players can also make money at casinos, because their competition is other players rather than the house, and as long as the house invest gambling its cut it doesn't care how the rest of the money is redistributed among the players.
So while venture capital might seem like gambling in that the odds are against the VC firms on any given bet, on average the expected payoff is positive, so the odds in the long run are actually in their favor. There is intelligent speculation as there is intelligent investing.
Buying and holding results in a positive contribution to the economy, but buying and selling quickly, the way day traders do, results in no net contribution. The taxonomy doesn't have to be completely distinct in order to be useful, nor does it need to be just a single feature.
Beyond the Dictionary
In investing, are you not betting on an uncertain outcome? But that's of relatively minor value, and those gamblers probably capture most of that value for themselves.
Furthermore, while it's possible to calculate exact odds for some casino games, this is rarely the case on Wall Street. But I'm probably not the best person to make a judgment on this question, because I've never found either gambling or investing to be entertaining