1src Forums - Buying stocks

RD100

01-12-2005, 05:43 PM

Yes, but the brokerage fees will make it expensive in proportion to a larger purchase.Internet brokerages like Scottrade charge only $7 for market orders done online.
And I don't think there is any limit to the number of shares you can buy/sell for only $7. I believe limit orders cost $11. Another very cheap online broker is Ameritrade.

FYI ... a market order means you place a buy/sell order, and your price is whatever the market is trading the stock for at the time your order is processed. A limit order means you request a maximum/minimum price, so the trade will not go through unless the price falls/rises to your preset limit.

Companies like Meryl Lynch, which use live brokers to make trades, are the ones which cost you the most in commissions. I recommend trading online.

In the beginning, it's best to pick well known companies. Guessing with a relatively unknown company may ultimately cost you your entire investment. You can go to Yahoo Finance section, and see if the stocks you like are recommended by analysts. They rate stocks between 1 - 5, with 1 being best and 5 being worst. Think of 1 as a "strong buy recommendation" and 5 as a "strong sell recommendation". Analysts continue to upgrade and downgrade companies based on how well a company is doing at that moment, and also based on future expectations for the company.

dante21

01-12-2005, 08:00 PM

Hey thanks man when I am at work tomorrow I will check both of their sights out! Thanks again!!

squeff

01-13-2005, 05:51 AM

Not sure if this violates the Off Topic rules.

You can buy one share of stock, but you will often pay the same fees ($10-$15 for most online brokers) for one share as you would for 100 or 1000.

Oneshare.com specializes in selling one share of a small number of companies. Mostly for people who want to give one share (and the certificate) as a gift. But there are fees, here.

It sounds like you're just starting to learn about investing. Starting small is a good idea. Instead of looking at buying one share, look at spending a particular amount of money. How must money can you afford to lose (only invest money that you can lose)? Can you afford to gamble $1000? $500? If so, open an account with E-Trade, Ameritrade, ScottTrade, etc. Then do a little research on stocks. Don't invest anything until you learn a little bit about the company, it's history, it's future. It's a lot of work, but when you invest without knowing enough, you have a higher risk of losing it all.

As a beginner, I'd suggest buying something you know well. What products do you use? What companies do you use? For example, big companies like Coke, Wal-Mart, and the like. They may or may not be great short-term investments, but you'll have a good feeling for what they do and they are safer long-term investments than small new companies.

Do not invest in weird companies that you heard about from friends unless you are really prepared to lose it all. While some turn out to be wonderful investments, most are not. If you don't understand what the company does, how they make money, and what their long term prospects are, then you might as well go to Las Vegas or throw your money in the trash can.

OK, enough preaching.

If you haven't already done so, you might want to consider looking into starting with a mutual fund or two. This will still require research. Do one that allows automatic investment each month. For example, buy the minimum investment (usually $1000-$2000) and then ask for automatic investment of $50-$100 (or more, if you can afford it) per month. This is dollar cost averaging and is a safer way to invest. Why? Because you buy lots of shares when it's cheap and few shares when it's expensive. Over many years, the price you pay per share is averaged.

On the other hand, if you're looking to learn about picking stocks (and have the time to do the research) more than just making a long-term investment, then by all means do that. Just, as I said, assume that you'll lose it all. And keep in mind that the more time you put towards research, the most successful you'll be. Or, more correctly, if you don't spend time on research (and just invest because you heard something is hot), you'll likely not do well. Unless, of course, you're a lucky person.

Chukar

01-13-2005, 11:24 AM

Internet brokerages like Scottrade charge only $7 for market orders done online.
And I don't think there is any limit to the number of shares you can buy/sell for only $7. I believe limit orders cost $11. Another very cheap online broker is Ameritrade.
MY point exactly. If you buy 1 share at $10 and the brokerage fee is $7, that's a lot more expensive than buying 100 shares at $10 and paying the same $7.

SamuraiCatJB

01-13-2005, 12:01 PM

squeff

01-13-2005, 12:14 PM

RD100

01-13-2005, 12:26 PM

If all you plan to buy is one share of a $10 stock, you shouldn't waste your time in the stock market. Just put the money in the bank. The odds of your stock increasing by 50% over a short period are very small. If it were that easy, everyone would be millionaires. The more likely scenerio is your stock will go up and down over time, and you might see it rise by 50% over several years. You might also see it drop by 50%. It's a gamble. That's why doing your homework and researching the company is important, so it will cut the odds of losing all of your investment. And you need to keep track of the company over time, to see if any significant changes happen, which might cause you to want to sell the stock.

With a small investment amount like $10, the commissions will eat up any profits you make. You have to pay a commission when you buy the stock. And you have to pay another commission when you sell the stock. And if you pay taxes, you will have to pay taxes out of the capital gains (increase in value) of your stock, when you sell the stock.

I would wait until you have at the very least, $100 or more to invest, before buying individual stocks. If your goal is to just own a share of a stock, then just buy it, and don't worry about the fact that it is very unlikely you will make any profit from it.

Tam Hanna

01-13-2005, 12:49 PM

Well, IMHO try to steer clear of all high-priced stocks. If you have a small budget, stick with small and cheap stock that gets good critics! In addition, do not only trust analysts or only the technical information. Only if both is good, invest your stock. And BTW, always try to keep a bvit of money back so that you can do a support buy if your stock falls very low and then starts to rise again!

BTW, good luck...

ucfgrad93

01-13-2005, 01:36 PM

One thing that has not been mentioned is dollar cost averaging. Its better to invest small amounts of money on a regular basis rather than one large lump sum.

The Basics: Regular investing can mean big rewards
The Basics is a regular feature about investing fundamentals.

Whether you're new to investing or a sophisticated investor who has survived the market ups and downs, a basic strategy of dollar-cost averaging can help you stretch your investment dollars.

Dollar-cost averaging is the practice of investing a set amount of money on a regular basis, regardless of whether the markets are climbing or falling. By doing this, you buy fewer shares when prices are high, more when prices are low. And because the amounts invested remain constant—through payroll deduction or another type of automatic investment plan—you can easily budget for them. You can also remove the risk associated with attempting to guess the "right time" to make a large transaction.

Buy low, sell high
For example, suppose you invest $250 every month in a mutual fund. If your fund is selling at $10 a share in the first month, your $250 investment buys 25 shares. If the price declines to $8.50 per share in the second month, the same $250 investment buys 29.4 shares. In this example, the share price averaged $9.25 ($18.50÷2 months), but the average price you paid was $9.19 apiece ($500÷54.4 shares). The average cost of your shares is lower than the average market price per share during the time you were investing because you took advantage of dollar-cost averaging, buying more shares when prices are low and fewer when prices are high.

This approach takes advantage of Wall Street's only certainty: Bond and stock prices fluctuate. With dollar-cost averaging, you make the market’s natural volatility work for you by lowering the average price you pay for your shares.

Keep in mind that dollar-cost averaging does not ensure a profit or protect you against a loss in declining markets. And, dollar-cost averaging is effective only if you continue to make regular purchases through thick and thin—even through bear markets. An investor who sticks to this routine may fare better in a sharp market decline than an investor who made a single large investment just before the decline. And investors who dollar-cost average throughout a market downturn may benefit handsomely when markets begin to rise again.

Forced discipline
Dollar-cost averaging has other benefits too. The strategy is a convenient way to build a significant portfolio over the long term because it allows investors to take advantage of compounding, when you earn interest, dividends, or capital gains on both your original investment and on the reinvested earnings of your investment. For these reasons, dollar-cost averaging can be especially appropriate for individual retirement accounts or other long-term investments.

It also imposes discipline on your investment program. By investing on autopilot, you can tune out the market "noise" and ignore the emotions that can lead to impulsive decisions and undermine an otherwise sound investment program. When the money is saved before you see it, there's less temptation to spend it. Many investors find that after a few weeks, they don't miss the money that they're putting aside in savings.

How Vanguard Can Help
Vanguard makes it easy to put dollar-cost averaging to work for you. Here are three services that can help you implement this strategy:

Automatic Investment Plan: Transfer a fixed amount of money electronically from your bank, savings and loan, or credit union account to your Vanguard® account on a regular basis.
Vanguard® Automatic Exchange Service: Move a fixed amount of money from one Vanguard account to another on a regular basis.
Vanguard® Direct Deposit Service: Have all or part of your paycheck or government payment deposited into your Vanguard account, regularly and automatically.
Note

Dollar-cost averaging does not guarantee that your investments will make a profit, nor does it protect you against losses when stock or bond prices are falling. You should also consider whether you would be willing to continue investing during a long downturn in the market since dollar-cost averaging involves continuous investment in securities regardless of fluctuating price levels.

Lots of companies out there will allow you to make smaller contributions if you commit to regular automatic deductions from your payroll, savings, checking account. Thats how I do it.

squeff

01-13-2005, 02:37 PM

One thing that has not been mentioned is dollar cost averaging. Its better to invest small amounts of money on a regular basis rather than one large lump sum.

Lots of companies out there will allow you to make smaller contributions if you commit to regular automatic deductions from your payroll, savings, checking account. Thats how I do it.

Actually, I mentioned it already. :o However, it's so important, I'm glad you mentioned it again! :)

ucfgrad93

01-13-2005, 02:40 PM

Actually, I mentioned it already.

Whoops! Sorry about that. :o

Tixx

01-13-2005, 03:51 PM

and if you buy a stock at $10 see it jump 50% to $15 and sell.... you have actually lost $9. :)

$10 buy plus $7 fee
$15 sell plus $7 fee

and a 50% rise in stock is extremely significant and rare now adays.

Off the top of my head I made over 50% on these recently:
Martha Stewart
Google
Sirius...

Not rare, just not talked about till after the fact when there is a push for a final rally at the cost of the individual investors.

Tixx

01-13-2005, 03:55 PM

Most brokers will not give you a discount to add additional shares to something you already own. Each buy/sell transaction is another $7 (or whatever).

There are mechanisms to buy certain stocks in this way, such as a DRIP (originally intended as a way to reinvest dividends). However, only certain companies do this and the fees can vary. See my post above about doing this with mutual funds (where there usually isn't a transaction fee -- the fund company makes money in different ways).

Bottom line is that it doesn't make FINANCIAL sense to buy one share. However, if you're looking at the $7 (or whatever) in fees as a cost of learning, you might not care. However, if you want to learn without paying the money, try "pretending to buy." Find an interesting stock and note it's price. Calculate what $1000 would buy. Now, check on the progress on you "prentend investment" of $1000 over time. Learn about why the stock price goes up. Or down. Read annual reports, SEC filings, and check out company news. Then, after a few months, if you think the stock still looks like a good buy, invest real money. That way, you get to learn without having to spend money.

Here is a free simulator at investopedia.com:

Learn to invest without putting your money at risk!
It's simple. First, sign up and $100,000 of virtual cash is placed in your account.

Build your portfolio with any stock that trades on a major North American exchange. Your account simulates all aspects of investing with an online brokerage and tracks what happens to your investments.

Continue to test investment strategies and learn advanced trading techniques such as short selling, trading with margin, and buying options. You can even create your own groups and challenge your friends.

And best of all, it's FREE!

http://simulator.investopedia.com/join.aspx

Tixx

01-13-2005, 03:56 PM

Tixx

01-13-2005, 03:58 PM

Tixx

01-13-2005, 03:59 PM

Basically everything else here is pretty sound advice.:)

RD100

01-13-2005, 05:46 PM

Investing is not gambling.
It is if you don't do your homework. That was my point. :)

dante21

01-13-2005, 07:58 PM

Tam Hanna

01-14-2005, 10:49 AM

This is some of the worst advice I have ever seen. (I have my licenses remember;))

Hi,
I know somebody who made a lot of cash with smaller stocks. Well, I am a more-less day trader and it is quite effortful-but how do you want to trade sth big with 1000$ or so if your broker eats up 15$ per transaction...

Tixx

01-14-2005, 02:04 PM

Hi,
I know somebody who made a lot of cash with smaller stocks. Well, I am a more-less day trader and it is quite effortful-but how do you want to trade sth big with 1000$ or so if your broker eats up 15$ per transaction...

Just like we all know someone who hit a jackpot and we forget to mention they gambled away $100,000, lost their wife or husband and they now have only a trailer home all to make a $10,000 jackpot come true.;) Great return on investment! :D

Tixx

01-14-2005, 02:06 PM

It is if you don't do your homework. That was my point. :)

Just like walking is gambling if you don't look both ways. I just want to clarifying that anything can be seen as gambling, but investment should not be thought as such unless you have chosen to make it so like walking.:)

Tixx

01-14-2005, 02:09 PM

Well the reson for buying only one stock isn't to make a ton of money off of it, even I know that is a crazy ideal. I just wanted to use that one stock to play around with it and see if I can get an understanding of it (if you really want to know how I learned the basics of the stock market go to howstuffworks.com). I will have about 500 bucks to really blow so I can set that aside. I know there are safer ways to invest your money, but the stock market looks so interesting that I want to see how it works (you know like people who open stuff up to see if it works my daughter does it and her mom calls it breaking stuff I call it studying stuff.) :)

I posted a free simulator in this thread that starts you off with I believe $100,000 and you can trade stocks, bonds, mutual funds, options... All current prices and such.

So you can learn more how it works before you make a decision to make a real purchase and thus better purchase with your funds.:)

RD100

01-14-2005, 06:51 PM

Just like walking is gambling if you don't look both ways. I just want to clarifying that anything can be seen as gambling, but investment should not be thought as such unless you have chosen to make it so like walking.:)But if you happen to get lucky on one stock, and double or triple your investment, you might let it go to your head, and then throw your entire gain into other similar stocks without thinking twice. And you may end up losing back all of your gain, plus your entire original investment.

Playing the stock market can create a similar psychological affect that you get when you bet on horses, or in a casino. You may be down, and you keep feeling you need to play just one more hand, or bet on one more horse to break even. And it never happens. Remember Mr. Greenspan's famous quote "irrational exhuberance" ? It does happen in the stock market.

Tixx

01-15-2005, 10:34 AM

But if you happen to get lucky on one stock, and double or triple your investment, you might let it go to your head, and then throw your entire gain into other similar stocks without thinking twice. And you may end up losing back all of your gain, plus your entire original investment.

Playing the stock market can create a similar psychological affect that you get when you bet on horses, or in a casino. You may be down, and you keep feeling you need to play just one more hand, or bet on one more horse to break even. And it never happens. Remember Mr. Greenspan's famous quote "irrational exhuberance" ? It does happen in the stock market.

My point being it CAN happen with basically anything. Investing is not gambling. Gambling is gambling. It is only ones choice which makes such things as investing, walking, driving, jogging, breathing...gambling. They are not inherently gambling nor do we call each of them a gamble when we speak of them so the same should hold true for investing. It is not gambling, it is investing. It is only ones choice to make it gambling like all other aspects of life where we have choices.:) This is why you do not see people refer to gambling as investing.;)

RD100

01-15-2005, 08:50 PM

My point being it CAN happen with basically anything. Investing is not gambling. Gambling is gambling. It is only ones choice which makes such things as investing, walking, driving, jogging, breathing...gambling. They are not inherently gambling nor do we call each of them a gamble when we speak of them so the same should hold true for investing. It is not gambling, it is investing. It is only ones choice to make it gambling like all other aspects of life where we have choices.:) This is why you do not see people refer to gambling as investing.;)
My point is that you may first put money into the stock market for investment purposes, but it may eventually lead you to gamble in the stock market down the road. Unlike the other activities you mentioned, none involve money. And money can lead to greed. It's just human nature for many of us.

Jim Cramer of MSNBC and TheStreet.com has a quote he often uses about the stock market: "Bulls make money, Bears make money, Pigs get slaughtered".

Tixx

01-16-2005, 11:18 AM

My point is that you may first put money into the stock market for investment purposes, but it may eventually lead you to gamble in the stock market down the road. Unlike the other activities you mentioned, none involve money. And money can lead to greed. It's just human nature for many of us.

Jim Cramer of MSNBC and TheStreet.com has a quote he often uses about the stock market: "Bulls make money, Bears make money, Pigs get slaughtered".

I have 100% understood your point from the beginning. Now for my point to be understood. Anything is possible and things indeed MAY happen. We all know this. Do we refer to buying your family a new home gambling every time we speak of home ownership? No. Do we refer to driving a car gambling? No. (even though we have the equivalent of aprox. 16 9-11 terrorist attacks worth of death involving them annually). How about buying bread on Tuesday vs. Monday. Prices may change, you never know.;) Everything has risk of some sort or another and the ability to have such risk increased with irresponsible behaviour.

So I hope you understand now that virtually anything can be considered gambling if done for gambling purposes or done in a way that makes a situation a gamble rather than a sound decision. So to single out investing, which is in fact not gambling, is an incorrect painting of the term unless the same logic is to be appied to every human activity that has this potential to become a gamble. But I have not seen that to be the case.

RD100

01-16-2005, 06:07 PM

I have 100% understood your point from the beginning. Now for my point to be understood. Anything is possible and things indeed MAY happen. We all know this. Do we refer to buying your family a new home gambling every time we speak of home ownership? No. Do we refer to driving a car gambling? No. (even though we have the equivalent of aprox. 16 9-11 terrorist attacks worth of death involving them annually). How about buying bread on Tuesday vs. Monday. Prices may change, you never know.;) Everything has risk of some sort or another and the ability to have such risk increased with irresponsible behaviour.

So I hope you understand now that virtually anything can be considered gambling if done for gambling purposes or done in a way that makes a situation a gamble rather than a sound decision. So to single out investing, which is in fact not gambling, is an incorrect painting of the term unless the same logic is to be appied to every human activity that has this potential to become a gamble. But I have not seen that to be the case.Yes ... a lot of things in life are a gamble. But I am only focusing on gambling with money.

To me, "gambling with money" is when you place money into a medium, such as the stock market, or even a slot machine, where you are uncertain of the outcome. The odds will be more in your favor by putting it in a stock which you have researched, but you can't still can't guarantee that you will make money in the end. It all depends on how the company performs during the time you hold the stock. And lots of different unforseeable factors can affect the performance. Just like when you put money in a slot machine. Who knows what will be displayed when the wheels will finally come to a stop? You may be more in control of your money in the stock market, but you are still taking a chance with it, by not putting it into a "guaranteed" investment. And that is why I consider the stock market a "gamble".

The only way to not "gamble" with your money is to put it in the bank, or a similar type of investment. At least with those investments, you are guaranteed a certain amount of interest. And bank accounts are also insured by the government for up to 100K.

So the stock market is in theory "gambling". It's just gambling that the government gives a "stamp of approval", because it helps the economy.

Tixx

01-16-2005, 09:10 PM

Yes ... a lot of things in life are a gamble. But I am only focusing on gambling with money.

To me, "gambling with money" is when you place money into a medium, such as the stock market, or even a slot machine, where you are uncertain of the outcome. The odds will be more in your favor by putting it in a stock which you have researched, but you can't still can't guarantee that you will make money in the end. It all depends on how the company performs during the time you hold the stock. And lots of different unforseeable factors can affect the performance. Just like when you put money in a slot machine. Who knows what will be displayed when the wheels will finally come to a stop? You may be more in control of your money in the stock market, but you are still taking a chance with it, by not putting it into a "guaranteed" investment. And that is why I consider the stock market a "gamble".

The only way to not "gamble" with your money is to put it in the bank, or a similar type of investment. At least with those investments, you are guaranteed a certain amount of interest. And bank accounts are also insured by the government for up to 100K.

So the stock market is in theory "gambling". It's just gambling that the government gives a "stamp of approval", because it helps the economy.

Here are my final points on this discussion:

1) You have the freedom to choose to believe investing is gambling.

2) We all have different risk tolerances and if yours is so low that only capital preservation is what you are comfortable with, that is fine and your right.

3) Investing is not gambling and that is a fact.

Finally I will point you in the right direction citing investopedia.com which has a great educational section,

"The Five Biggest Stock Market Myths", Myth #1 Investing in stocks is just like gambling.

Nothing could be more untrue than this myth, yet it's a big reason why many people shy away from the stock market. To understand why investing in stocks is inherently different from gambling, we need to review what it means to buy stocks. A share of common stock (http://www.investopedia.com/terms/c/commonstock.asp) is ownership in a company. It entitles the holder to a claim on assets as well as a fraction of the profits that the company generates. Too often, people think of shares as a way to test their luck, and they forget that stock represents the ownership of a company.

In the stock market, investors are constantly trying to assess the profit that will be left over for the shareholders. This is why stock prices fluctuate. The outlook for business conditions is always changing, and thus so are the future earnings of a company. Assessing the value of a company isn't an easy practice. There are so many variables involved that the short-term price movements appear to be random (academics call this the random walk theory (http://www.investopedia.com/terms/r/randomwalktheory.asp)); however, over the long-term, a company is only worth the present value (http://www.investopedia.com/terms/p/presentvalue.asp) of the profits it will make. In the short term a company can survive without profits because of the expectations of future earnings, but no company can fool investors forever. Eventually a company's stock price will show the true value of the firm.

Gambling, contrary to investing, is a zero-sum game (http://www.investopedia.com/terms/z/zero-sumgame.asp). It merely takes money from a loser and gives it to a winner. No value is ever created. By investing, we increase the potential to increase the overall wealth of society. As companies compete, they increase productivity and develop products that make can make our lives better. Don't confuse investing and creating wealth with gambling's zero-sum game.

squeff

01-17-2005, 08:23 AM

"The Five Biggest Stock Market Myths", Myth #1 Investing in stocks is just like gambling.

Nothing could be more untrue than this myth, yet it's a big reason why many people shy away from the stock market. To understand why investing in stocks is inherently different from gambling, we need to review what it means to buy stocks. A share of common stock (http://www.investopedia.com/terms/c/commonstock.asp) is ownership in a company. It entitles the holder to a claim on assets as well as a fraction of the profits that the company generates. Too often, people think of shares as a way to test their luck, and they forget that stock represents the ownership of a company.

In theory, yes. In practice, no. Owning a share of stock does not give you the right to any assets of the company. If I own a share of stock, I cannot call the company and demand that they give me anything (other than information). I'm not entited to my "share" of profits, I'm not entitled to exchange my shares for a percentage of company assets (net worth).

Suppose I own 100 shared in a company with 1,000,000 available shares. That means I own 0.01% of the company. Suppose the company makes $50,000,000 in profit. Can I call the company and ask them to cut me a check for $5000? Suppose that the assessed net worth of the company is $10B. Can I turn in my shares and get my $100,000?

Investing is often more about potential and perception than current reality. I work for a company that saw a 25% dip in the stock on the day we annouced we had a bad year. Simply because we had annouced this, investors lost 25%.

Similarly, think about the 90's dot-coms. These are companies that were operating at a loss. Some had no revenue at all. And yet, some that invested made a lot of money. Some. Why? Because there was a belief that these companies had potential to make money. But, in the end, most didn't.

That's the way it is with gambling. You "invest" money now with a hope that, in the future, you'll get it and more back. With casino games, that future is typically less than a minute away. With stocks (or certain other investment instruments), it's months or years.

In the stock market, investors are constantly trying to assess the profit that will be left over for the shareholders. This is why stock prices fluctuate. The outlook for business conditions is always changing, and thus so are the future earnings of a company. Assessing the value of a company isn't an easy practice. There are so many variables involved that the short-term price movements appear to be random (academics call this the random walk theory (http://www.investopedia.com/terms/r/randomwalktheory.asp)); however, over the long-term, a company is only worth the present value (http://www.investopedia.com/terms/p/presentvalue.asp) of the profits it will make. In the short term a company can survive without profits because of the expectations of future earnings, but no company can fool investors forever. Eventually a company's stock price will show the true value of the firm.

They key here is "evenutally." Making guesses as to WHEN or IF is still a guess.

It's true that if you can spend your life doing research to the nth degree, you will be able to pick investments well (although there are still things that can happen that are unexpected). However, few can do this. Therefore, we "gamble" that we've collected enough information to make an educated investment. For some, a "tip" from a friend is sufficient. For others, it's looking at stock graph. For others, it's reading SEC filings.

Gambling, contrary to investing, is a zero-sum game (http://www.investopedia.com/terms/z/zero-sumgame.asp). It merely takes money from a loser and gives it to a winner. No value is ever created. By investing, we increase the potential to increase the overall wealth of society. As companies compete, they increase productivity and develop products that make can make our lives better. Don't confuse investing and creating wealth with gambling's zero-sum game.

This is an unfair definition of gambling. The definition of gambling does NOT include any aspects of being "zero-sum" or not. Therefore, making an argment based on this is distracting from the real point. At best, it's a "common good argument" that says "it's OK that YOU lost money, so long as society as a whole has more total money." Few invest with the intention of losing their own money such that the overall economy can improve.

Gambling is simply the act of "risking" something (typically money) in exchange for a chance to "win" or "lose."

Tixx, I appreciate the fact that you are licensed. And, as such, I believe you are obligated to remind people that (a) you may lose your principal, (b) past performance in not an indication of future performance, etc.

As for me, my educational background is on gambling behavior.

You are right: walking is gambling with your life. Riding is a car is gambling with your life. And, to some extent, we DO say this. This past new year's eve, my wife said "if we go out on the road, we're gambling our lives." Why? Because there was a chance that we'd be hit by a drunk driver. But, we took a CHANCE by WAGERING our lives WITH THE POTENTIAL BENEFIT that we'd have a good time and live to get home. When you take a CHANCE on something by WAGERING with the hope for a POTENTIAL BENEFIT, you are gambling.

When you invest, you take a CHANCE by WAGERING your investment money that there with be a POTENTIAL BENEFIT of the investment making you money.

Tixx

01-17-2005, 09:30 AM

In theory, yes. In practice, no. Owning a share of stock does not give you the right to any assets of the company. If I own a share of stock, I cannot call the company and demand that they give me anything (other than information). I'm not entited to my "share" of profits, I'm not entitled to exchange my shares for a percentage of company assets (net worth).

Suppose I own 100 shared in a company with 1,000,000 available shares. That means I own 0.01% of the company. Suppose the company makes $50,000,000 in profit. Can I call the company and ask them to cut me a check for $5000? Suppose that the assessed net worth of the company is $10B. Can I turn in my shares and get my $100,000?

Investing is often more about potential and perception than current reality. I work for a company that saw a 25% dip in the stock on the day we annouced we had a bad year. Simply because we had annouced this, investors lost 25%.

Similarly, think about the 90's dot-coms. These are companies that were operating at a loss. Some had no revenue at all. And yet, some that invested made a lot of money. Some. Why? Because there was a belief that these companies had potential to make money. But, in the end, most didn't.

That's the way it is with gambling. You "invest" money now with a hope that, in the future, you'll get it and more back. With casino games, that future is typically less than a minute away. With stocks (or certain other investment instruments), it's months or years.

They key here is "evenutally." Making guesses as to WHEN or IF is still a guess.

It's true that if you can spend your life doing research to the nth degree, you will be able to pick investments well (although there are still things that can happen that are unexpected). However, few can do this. Therefore, we "gamble" that we've collected enough information to make an educated investment. For some, a "tip" from a friend is sufficient. For others, it's looking at stock graph. For others, it's reading SEC filings.

This is an unfair definition of gambling. The definition of gambling does NOT include any aspects of being "zero-sum" or not. Therefore, making an argment based on this is distracting from the real point. At best, it's a "common good argument" that says "it's OK that YOU lost money, so long as society as a whole has more total money." Few invest with the intention of losing their own money such that the overall economy can improve.

Gambling is simply the act of "risking" something (typically money) in exchange for a chance to "win" or "lose."

Tixx, I appreciate the fact that you are licensed. And, as such, I believe you are obligated to remind people that (a) you may lose your principal, (b) past performance in not an indication of future performance, etc.

As for me, my educational background is on gambling behavior.

You are right: walking is gambling with your life. Riding is a car is gambling with your life. And, to some extent, we DO say this. This past new year's eve, my wife said "if we go out on the road, we're gambling our lives." Why? Because there was a chance that we'd be hit by a drunk driver. But, we took a CHANCE by WAGERING our lives WITH THE POTENTIAL BENEFIT that we'd have a good time and live to get home. When you take a CHANCE on something by WAGERING with the hope for a POTENTIAL BENEFIT, you are gambling.

When you invest, you take a CHANCE by WAGERING your investment money that there with be a POTENTIAL BENEFIT of the investment making you money.

Honestly I do not have time to teach a course on the subject at this point and many of your conclusion/parallels are flawed.

If you are an expert in gambling and recognize just about any action or inaction to be a potential gamble and state such at every point in every conversation on every topic, then I agree with you based on consistency of the position.

If you choose to merely single out stock market investment as a potential gamble then clearly there is no consistency based on the lack of pointing out the potential for all other actions/inactions to become a gamble. And thus I would disagree completely based on the fact every action/inaction can be made into a potential gamble and positions held should be consistent.

RD100

01-17-2005, 10:27 AM

Here are my final points on this discussion:

1) You have the freedom to choose to believe investing is gambling.

2) We all have different risk tolerances and if yours is so low that only capital preservation is what you are comfortable with, that is fine and your right.

3) Investing is not gambling and that is a fact.

Finally I will point you in the right direction citing investopedia.com which has a great educational section,

"The Five Biggest Stock Market Myths", Myth #1 Investing in stocks is just like gambling.

Nothing could be more untrue than this myth, yet it's a big reason why many people shy away from the stock market. To understand why investing in stocks is inherently different from gambling, we need to review what it means to buy stocks. A share of common stock (http://www.investopedia.com/terms/c/commonstock.asp) is ownership in a company. It entitles the holder to a claim on assets as well as a fraction of the profits that the company generates. Too often, people think of shares as a way to test their luck, and they forget that stock represents the ownership of a company.

In the stock market, investors are constantly trying to assess the profit that will be left over for the shareholders. This is why stock prices fluctuate. The outlook for business conditions is always changing, and thus so are the future earnings of a company. Assessing the value of a company isn't an easy practice. There are so many variables involved that the short-term price movements appear to be random (academics call this the random walk theory (http://www.investopedia.com/terms/r/randomwalktheory.asp)); however, over the long-term, a company is only worth the present value (http://www.investopedia.com/terms/p/presentvalue.asp) of the profits it will make. In the short term a company can survive without profits because of the expectations of future earnings, but no company can fool investors forever. Eventually a company's stock price will show the true value of the firm.

Gambling, contrary to investing, is a zero-sum game (http://www.investopedia.com/terms/z/zero-sumgame.asp). It merely takes money from a loser and gives it to a winner. No value is ever created. By investing, we increase the potential to increase the overall wealth of society. As companies compete, they increase productivity and develop products that make can make our lives better. Don't confuse investing and creating wealth with gambling's zero-sum game.Of course, on a website called investopedia.com, you are going to hear an explanation which leans towards an investment "point of view". No investment related website will ever want to tell someone that investing in the stock market is similar to gambling.

If you look up the definition of "gamble" at dictionary.com (http://dictionary.reference.com/search?q=gamble), you will see the following:

4 entries found for gamble.
gam·ble Audio pronunciation of "gamble" ( P ) Pronunciation Key (gmbl)
v. gam·bled, gam·bling, gam·bles
v. intr.
1.
1. To bet on an uncertain outcome, as of a contest.
2. To play a game of chance for stakes.
2. To take a risk in the hope of gaining an advantage or a benefit.
3. To engage in reckless or hazardous behavior: You are gambling with your health by continuing to smoke.

v. tr.
1. To put up as a stake in gambling; wager.
2. To expose to hazard; risk: gambled their lives in a dangerous rescue mission.

n.
1. A bet, wager, or other gambling venture.
2. An act or undertaking of uncertain outcome; a risk: I took a gamble that stock prices would rise.

[Perhaps from obsolete gamel, to play games, from Middle English gamen, gamenen, to play, from Old English gamenian, from gamen, fun.]gambler n.
[Download or Buy Now]
Source: The American Heritage® Dictionary of the English Language, Fourth Edition
Copyright © 2000 by Houghton Mifflin Company.
Published by Houghton Mifflin Company. All rights reserved.
Main Entry: gam·ble
Pronunciation: 'gam-b&l
Function: verb
Inflected Forms: gam·bled; gam·bling
intransitive verb : to risk something of value for the chance of winning a prize transitive verb : to risk (something) for the chance of winning a prize —gam·bler /-bl&r/ noun
Source: Merriam-Webster Dictionary of Law, © 1996 Merriam-Webster, Inc.
gamble
n 1: money that is risked for possible monetary gain 2: a risky act or venture v 1: take a risk in the hope of a favorable outcome; "When you buy these stocks you are gambling" [syn: chance, risk, hazard, take chances, adventure, run a risk, take a chance] 2: play games for money
My point about the relationship between investing in the stock market and gambling, is that unlike a guaranteed investment such as a bank account or CD, you are taking a risk in the stock market. There is no guarantee you will make money on your investment. And there is a chance you will lose money. The same holds true for any type of gambling with money.

Personally, I have invested in the stock market for many years. And I have both made money and lost money in different stocks. I realize each time that I purchase a stock, there is no guarantee I will make a profit. I just try my best, and hope that my initial research, and ongoing tracking, will pay off in the end.

Also ... in reference to this specific quote ...
Gambling, contrary to investing, is a zero-sum game (http://www.investopedia.com/terms/z/zero-sumgame.asp). It merely takes money from a loser and gives it to a winner. No value is ever created. By investing, we increase the potential to increase the overall wealth of society. As companies compete, they increase productivity and develop products that make can make our lives better. Don't confuse investing and creating wealth with gambling's zero-sum game.Gambling in a casino helps contribute to the economy as well, so there is value created. The casino uses the gambling income to pay the salaries of its employees, which in turn, allows them to be able to purchase goods and services from other businesses. The casino also pays taxes, which helps our economy in general.

SamuraiCatJB

01-17-2005, 10:56 AM

Not that I expect to make anyone listen... it is obvious we are back to "I know I am right, so I will pound it into you" mode....

A) Investing odds of success increase with a varried portfolio. Still not guarenteed, but as long as the US economy is improving, your portfolio will improve. If however the US economy crashes, that is the only gamble left. A varied portfolio generally improves on bank interest by a smidgen, again as long as the US economy is improving. So the only "gambling" you are really doing is with the US economy (or what ever country you are investing in).

B) Owning stock does gives ownership rights, however, every company treats that differently. I have in the past been given survey response on CEO viability, and on one occasion even company direction. So yes, owning only 12 stocks, I was given decision making power, though on a minor scale. It is like a single vote in an ellection, if you don't do it, it doesn't mean that much, but as a group you have a lot of sway. So, yes, I even did my ownership part.

Now, back to our regularly scheduled argument. :)

squeff

01-17-2005, 11:02 AM

I'm getting the feeling that Tixx, who it sounds like is in the investment community, feels a little defensive (as would I, if I were employed in the investment community) about the word "gambling" being applied to investing.

As I've stated, I have a formal background in gambling, game theory, probability/stochastics, etc. I DO apply gambling to a large number of behaviors.

It's people who claim that investing is totally safe, imply that you won't lose money, etc. that concern me. Telling people "investing isn't gambling" without going further (as Tixx has) is irresponsible because there are (unfortunately) a lot of people who do interpret "investing isn't gambling" to mean that it's safe. It's not. You can lose money. And until you realize that you can lose money investing (the risk differs depending on the investment -- something like a CD isn't risky), you're prepared to do it.

Tixx, If I've misunderstood your reason for sound defensive... or if you didn't mean to sound defensive, sorry. I (and other) just wanting to make the point that there is risk in investing. Yes, there is risk in other things. But since this was a discussion about investing, talking about risk elsewhere isn't really the point.

Maybe had we used the term "risk" instead of "gambling," you would have felt better?

P.S. I realize that you don't have time to "teach a course," but I think (until proven otherwise) that my conclusions are correct. I base this on personal experience as well as research I've done.

squeff

01-17-2005, 11:08 AM

B) Owning stock does gives ownership rights, however, every company treats that differently. I have in the past been given survey response on CEO viability, and on one occasion even company direction. So yes, owning only 12 stocks, I was given decision making power, though on a minor scale. It is like a single vote in an ellection, if you don't do it, it doesn't mean that much, but as a group you have a lot of sway. So, yes, I even did my ownership part.

Now, back to our regularly scheduled argument. :)

Good point. Keep in mind, however, that a small investor doesn't have that much of a say in many cases. Voting is usually based on % ownership. Therefore, if someone or some company owns a large percentage, your votes counts for little (assuming that you're a dissenting vote). For example, if someone owns 51%, your vote won't do much... True, there are times when a minority can have a powerful voice... don't want to belittle that.

I remember a sitcom where a guy buys one share of stock in a ceral company. He thinks there should be more raisins in the box, so he shows up at HQ saying "I'm an owner." At first, they think he's a majority owner, so they listen to him. Then, when they find out that he owns 1 share, they show him the door. Although a sitcom, I'm willing to bet that Microsoft isn't doing to do anything for me because I own a few shares.

RD100

01-17-2005, 11:12 AM

Not that I expect to make anyone listen... it is obvious we are back to "I know I am right, so I will pound it into you" mode....

A) Investing odds of success increase with a varried portfolio. Still not guarenteed, but as long as the US economy is improving, your portfolio will improve. If however the US economy crashes, that is the only gamble left. A varied portfolio generally improves on bank interest by a smidgen, again as long as the US economy is improving. So the only "gambling" you are really doing is with the US economy (or what ever country you are investing in).
Even if you have a variety of different types of stocks, there is still no guarantee your portfolio will increase in value. Odds are significantly in your favor, but along with the US economy doing well, you still have to hope your "specific" stocks increase, and that may not happen. The companies you own may simply have poor management, and may tank regardless of how well the economy does. That's the "gamble" of investing in the stock market.

SamuraiCatJB

01-17-2005, 11:55 AM

Even if you have a variety of different types of stocks, there is still no guarantee your portfolio will increase in value. Odds are significantly in your favor, but along with the US economy doing well, you still have to hope your "specific" stocks increase, and that may not happen. The companies you own may simply have poor management, and may tank regardless of how well the economy does. That's the "gamble" of investing in the stock market.

true, but the "gamble" is actually only on the USA economy with a varied portfolio. If you widen your "portfolio" in a gambling establishment you will actually guarentee loss. "Gambling" is the opposite of interest, most gambling is a guarenteed 4.5% or higher odds in favor of the house. Thus the dislike of the comparison to gambling. In gambling you cannot improve your odds, at best you can play every game in the house and win every game, and loose every game, you would loose 4.5% or more guarenteed.

This is why the comparison is invalid. Gambling is the opposite of bank interest. The house is not gambling either. they have a varied portfolio across the broad spectrum of games and people. As one person wins $1000 another looses $1045. The house will always win. Investing is similar to the house side of a gambling establishment. It's planned investing, loose here, gain there. Net gain. If people suddenly stopped coming to the casino, the casino will loose money, thus the casino is gambling on the state of the economy as well. As long as the economy is doing well, as long as traffic meets the required minimum, the house's odds are severely against loosing with the varied investments of loss and gains across the entire floor of the building.

SamuraiCatJB

01-17-2005, 11:59 AM

Good point. Keep in mind, however, that a small investor doesn't have that much of a say in many cases. Voting is usually based on % ownership. Therefore, if someone or some company owns a large percentage, your votes counts for little (assuming that you're a dissenting vote). For example, if someone owns 51%, your vote won't do much... True, there are times when a minority can have a powerful voice... don't want to belittle that.

I remember a sitcom where a guy buys one share of stock in a ceral company. He thinks there should be more raisins in the box, so he shows up at HQ saying "I'm an owner." At first, they think he's a majority owner, so they listen to him. Then, when they find out that he owns 1 share, they show him the door. Although a sitcom, I'm willing to bet that Microsoft isn't doing to do anything for me because I own a few shares.

you have only one vote in a national ellection. 1 in millions. Your voice is smaller than that of owning a stock, yet people are encouraged to vote. You can use your vote anyway you want. Geocities originally offered private communication to stock owners, so you could contact other investors and try to sway a majority to your view, as they tried to do the same. Your voice is as small, or as large as you percieve it to be. :)

sebring

01-17-2005, 12:23 PM

Investing is not gambling.

Actually, the way some people "invest", gambling is exactly what it is.
:p

RD100

01-17-2005, 12:29 PM

true, but the "gamble" is actually only on the USA economy with a varied portfolio. If you widen your "portfolio" in a gambling establishment you will actually guarentee loss. "Gambling" is the opposite of interest, most gambling is a guarenteed 4.5% or higher odds in favor of the house. Thus the dislike of the comparison to gambling. In gambling you cannot improve your odds, at best you can play every game in the house and win every game, and loose every game, you would loose 4.5% or more guarenteed.

This is why the comparison is invalid. Gambling is the opposite of bank interest. The house is not gambling either. they have a varied portfolio across the broad spectrum of games and people. As one person wins $1000 another looses $1045. The house will always win. Investing is similar to the house side of a gambling establishment. It's planned investing, loose here, gain there. Net gain. If people suddenly stopped coming to the casino, the casino will loose money, thus the casino is gambling on the state of the economy as well. As long as the economy is doing well, as long as traffic meets the required minimum, the house's odds are severely against loosing with the varied investments of loss and gains across the entire floor of the building.But as I said, even if the economy does well, selected stocks in your portfolio may still go down if the companies have poor management. If an ambitious CEO (ie. Time-Warner / AOL) decides a merger is best for the company, even if the economy does well, the stock may suffer due to poor decisions by the company's top management.

A varied portfolio cuts your risk, and it may also cut your chances of having a larger return, since you are spreading your bet over many stocks. But you are still taking a risk with your money. And to me, that is the "gamble". The question you have to ask yourself as investor in the stock market, is how much are you willing to risk, and how much can you afford to lose ?

I also realize that casinos set up machines so the odds favor the house. I am certain the odds programmed into slot machines are approved by casino regulatory committees. The casino does have a right to expect more income than outflow, or how else would it stay in business? But you can still beat the house if your gambling skills are good. For example, on any given hand, a good blackjack player will know when the odds are in his favor, and when to split, and bet insurance, etc. A poor blackjack player will not have this advantage. And the casinos are counting on the poor blackjack players to outnumber the good ones. If the casino spots someone who appears to be counting cards during blackjack, the casino can ask them to leave.

sebring

01-17-2005, 12:33 PM

Not sure if this has been mentioned before, since I admit to not having read the entire thread, but Dividend Reinvestment plans are a very economical way to invest directly with the company for small or no fees.

http://www.fool.com/school/Drips.htm

They are also for executing an effective "dollar cost averaging" investment program.

squeff

01-17-2005, 01:12 PM

you have only one vote in a national ellection. 1 in millions. Your voice is smaller than that of owning a stock, yet people are encouraged to vote. You can use your vote anyway you want. Geocities originally offered private communication to stock owners, so you could contact other investors and try to sway a majority to your view, as they tried to do the same. Your voice is as small, or as large as you percieve it to be. :)

Excellent point.

The difference is that with stocks (for example), it's possible for one person to have a majority of the votes. Even if not one person, there is sometimes a small group that owns a majority or close to it.

This is like saying that George W. Bush is allowed to personally control 51% of the votes (NOTE: this is not intended to be a political discussion, so please no snide partisan remarks).

squeff

01-17-2005, 01:23 PM

I also realize that casinos set up machines so the odds favor the house. I am certain the odds programmed into slot machines are approved by casino regulatory committees. The casino does have a right to expect more income than outflow, or how else would it stay in business? But you can still beat the house if your gambling skills are good. For example, on any given hand, a good blackjack player will know when the odds are in his favor, and when to split, and bet insurance, etc. A poor blackjack player will not have this advantage. And the casinos are counting on the poor blackjack players to outnumber the good ones. If the casino spots someone who appears to be counting cards during blackjack, the casino can ask them to leave.

Slot machines are pure luck. They do have a minimum payout set by regulation. However, many casinos in AC/LV tend to do better: 90% to 95% payout (believe it or not). They do this because they want to bring people in and keep them playing. If people put $1,000,000/day into slot machines in a casino, that's still $50,000 to the casino (at 95%).

Some other games are not pure luck. Blackjack requires some skill (although I guess you could play "blind"). The more skill you have, the better you'll come to beating the casino. If you play "perfectly" (and count cards), you'll almost hit 100%. However, there are a few things against you. The first is that, even if you count cards perfectly, there is still a lot of chance. You're just using skill to better understand (and react) to chance/uncertainty. You're also at a disadvatage due to a few rules in the house favor. However, it's close enough that you it's possible for an excellent player to walk away a winner.

Same with video poker. If you have a high level of skill, you can actually win.

And thus it is with investing. No matter how much skill you have, there is always a high amount of chance. And, it's hard to be skilled enough that you can marginalize the chance/risk. Reduce it, yes. But not marginalize or certainly not eliminate it.

Investing is like blackjack or poker. Chance+Luck. It's not like slots (pure luck). Which is what, I believe, TIXX is objecting to.

And, by the way, driving is also like blackjack. Chance+Luck.

Tixx

01-17-2005, 07:04 PM

Not that I expect to make anyone listen... it is obvious we are back to "I know I am right, so I will pound it into you" mode....
My main point has been that if people want to emphasize investments as having the potential to become gambling, then for all consistency purposes, they must at the same time address every other action/inaction with the same fervor as to the respective gambling potential. Simple, fair and consistent. That is all I ask.:)

A) Investing odds of success increase with a varried portfolio. Still not guarenteed, but as long as the US economy is improving, your portfolio will improve. If however the US economy crashes, that is the only gamble left. A varied portfolio generally improves on bank interest by a smidgen, again as long as the US economy is improving. So the only "gambling" you are really doing is with the US economy (or what ever country you are investing in).
That is diversification used to decrease systematic risk.:)

B) Owning stock does gives ownership rights, however, every company treats that differently. I have in the past been given survey response on CEO viability, and on one occasion even company direction. So yes, owning only 12 stocks, I was given decision making power, though on a minor scale. It is like a single vote in an ellection, if you don't do it, it doesn't mean that much, but as a group you have a lot of sway. So, yes, I even did my ownership part.
Glad to hear it as many people just toss it out.

Now, back to our regularly scheduled argument. :)
Nothing really to argue about. ;)

Tixx

01-17-2005, 07:07 PM

Actually, the way some people "invest", gambling is exactly what it is.
:p

The way some people walk across the street it is gambling. The way some people drive it is gambling. The diets people eat are gambling. Every action/inaction can be turned into a gamble and should be pointed out equally as such. Opposed to singling out only that potential in investments.

RD100

01-17-2005, 07:28 PM

Tixx ... not sure how far back you read ... but hopefully you saw this post (http://www.1src.com/forums/showpost.php?p=769092&postcount=34).

SamuraiCatJB

01-17-2005, 07:34 PM

Tixx ... not sure how far back you read ... but hopefully you saw this post (http://www.1src.com/forums/showpost.php?p=769092&postcount=34).

however, I think Tixx's point about gambling goes back to my point on a casino. Gambling systems are designed upfront to produce net loss by people. Even your example of people counting cards doesn't work because now they won't tell you how many decks they use anywhere between 7 and 12, one gambling establishment has a 16 deck shuffler for the blackjack. The point is that "gambling" by definition is risk, however "gambling" by the modern verb is actually a process to reduce risk and making sure you loose money. Thus "gambling" is no longer risk, it is "loss".

Tixx

01-17-2005, 07:34 PM

I'm getting the feeling that Tixx, who it sounds like is in the investment community, feels a little defensive (as would I, if I were employed in the investment community) about the word "gambling" being applied to investing.

Not defensive in the least. We live in a free society in which people can choose to believe what they so choose. But I do defend that if we are to point out that investments have the potential to become a type of gambling, then in all fairness we must point out for every action or inaction we discuss that they also have the potential to become a gamble.:)

As I've stated, I have a formal background in gambling, game theory, probability/stochastics, etc. I DO apply gambling to a large number of behaviors.
That is fine as my background is finance and politics.:)

It's people who claim that investing is totally safe, imply that you won't lose money, etc. that concern me. Telling people "investing isn't gambling" without going further (as Tixx has) is irresponsible because there are (unfortunately) a lot of people who do interpret "investing isn't gambling" to mean that it's safe. It's not. You can lose money. And until you realize that you can lose money investing (the risk differs depending on the investment -- something like a CD isn't risky), you're prepared to do it.
What I'd like to correct here is that you are choosing to over-emphasize and blow out of proportion the gambling potential and refer to investment as gambling because of what you feel others may or may not believe. The issue does not change on the basis of what others incorrectly choose to believe. If a whole community believed pigs had wings in addition to their 4 legs would you then try to teach them in return that pigs have only 2 legs? No, you'd tell them they had 4 legs. Make no sense to change the facts based on what people may incorrectly believe.

Tixx, If I've misunderstood your reason for sound defensive... or if you didn't mean to sound defensive, sorry. I (and other) just wanting to make the point that there is risk in investing. Yes, there is risk in other things. But since this was a discussion about investing, talking about risk elsewhere isn't really the point.
Yes, there is risk in everything. At the same time I have never seen a discussion on this board go into such a negative and counter productive painting of the potential risks in any other topic. Nor have I seen the people here refering to investment as gambling stay consistent on pointing out potential risks in all other activity/inactivity of life.

Maybe had we used the term "risk" instead of "gambling," you would have felt better?
Risk is a proper term to use with investment. Because there is always some sort of risk with investments. RD100 does not realize that his bank may not protect him against inflation and ensure future purchasing power. Of course there are instruments available.

RD100

01-17-2005, 08:06 PM

Risk is a proper term to use with investment. Because there is always some sort of risk with investments. RD100 does not realize that his bank may not protect him against inflation and ensure future purchasing power. Of course there are instruments available.I still stand on the definition of "gamble" as I mentioned in the dictionary.com quote I included in my earlier post. The words "gamble" and "risk" are synonomous, so why is there a question about what to call it ?

And yes ... I do realize that bank acount interest may, at times, be less than the rate of inflation. Why would you assume that I wouldn't understand a simple concept like this ? My college degree is not in finance ... but I duz hav a colleege educaasun! ;) I've been investing in the stock market for many years. I've bought and sold many individual stocks over the years, as well as mutual funds. My point is not to knock investing in the market. It is just to say that investing in the market is a form of "gambling", as based on the definition I provided earlier.

SamuraiCatJB

01-17-2005, 08:14 PM

I still stand on the definition of "gamble" as I mentioned in the dictionary.com quote I included in my earlier post. The words "gamble" and "risk" are synonomous, so why is there a question about what to call it ?

And yes ... I do realize that bank acount interest may, at times, be less than the rate of inflation. Why would you assume that I wouldn't understand a simple concept like this ? I've been investing in the stock market for many years. My point is not to knock investing in the market. It is just to say that investing in the market is a form of "gambling", as based on the definition I provided earlier.

but gambling is taking an evolutionary change in representing deliberate loss to the user. That is why those in the investment community prefer "risk" to "gambling" Gambling is a verb that is also represented by the action of entering an establishment who's primary intention is to take your money and induce a net loss. All words evolve, that is right now why investment people prefer risk to gamble in word choices.

RD100

01-17-2005, 08:19 PM

but gambling is taking an evolutionary change in representing deliberate loss to the user. That is why those in the investment community prefer "risk" to "gambling" Gambling is a verb that is also represented by the action of entering an establishment who's primary intention is to take your money and induce a net loss. All words evolve, that is right now why investment people prefer risk to gamble in word choices.
It's all semantics. It doesn't change the facts. :)

SamuraiCatJB

01-17-2005, 08:33 PM

It's all semantics. It doesn't change the facts. :)

but it does change perception. Today it is not good to call african american's by words that used to be "okay". you can call that semantics too. But the fact is, gambling is the deliberate attempt to make you loose money, investing is up to you to choose wether you want to choose to try to win or try to loose. Gambling by definition has the goal to remove that choice from you. As was mentioned earlier you can choose to make investing gambling, but it's intent is different. Semantics or not, investing is not gambling by modern "perception" of the word.

Tixx

01-17-2005, 10:26 PM

It's all semantics. It doesn't change the facts. :)

You are correct in that labels do not change the facts, but having someone trying to label investment as gambling is indeed trying to change the facts.

And if I read your definitions correctly, like I stated from the beginning, they used stock as an example that has potential to be made a gamble, not stating that an investment equals a gamble.

And I have to agree with Samurai's subsequent post following your comment here.

RD100

01-17-2005, 10:38 PM

but it does change perception. Today it is not good to call african american's by words that used to be "okay". you can call that semantics too. But the fact is, gambling is the deliberate attempt to make you loose money, investing is up to you to choose wether you want to choose to try to win or try to loose. Gambling by definition has the goal to remove that choice from you. As was mentioned earlier you can choose to make investing gambling, but it's intent is different. Semantics or not, investing is not gambling by modern "perception" of the word.
I think "perception" is the correct word, but not in the way you are using it. I believe we have different "perceptions" of what gambling means to each of us. To me, the word "gamble" means putting money at risk, in hopes to make more money. But the term "gambling" can have a negative meaning, since it is often used associated with illegal activity. I don't believe that gambling is always a "deliberate attempt to make you lose money". What about state run lotteries ? Their goal isn't for you to lose a dollar. Their goal is to raise money to be used for senior citizens. And as part of the lottery process, a few lucky winners get rich. Some types of gambling may be as you describe, where the goal is to take your money. But you aren't being forced to participate. You do so voluntarily in hopes of being a winner. And the same holds true for investing. You do so voluntarily, in hopes of making a profit on your investment.

RD100

01-17-2005, 10:51 PM

And if I read your definitions correctly, like I stated from the beginning, they used stock as an example that has potential to be made a gamble, not stating that an investment equals a gamble.
Name one situation when buying a stock is not a "gamble", and where there is absolutely no chance of losing any of your original investment.

And I know you can place an open order to "sell if price falls below your original investment amount", but I doubt most people would do this, since it may likely be sold on the same day they make the purchase. More likely they would say sell if it falls around 15% below the purchase price, so they don't take a huge loss. So they would still lose part of their investment. Therefore, they took a gamble, and they walked away from the table, before they lost all their chips.

Tixx

01-17-2005, 11:39 PM

Name one situation when buying a stock is not a "gamble",
Since Samurai and I have pointed out buying stock is not inherently a gamble, then I say all stock purchases are inherently not gambles. Unless one actively or ignorantly chooses to make the situation a gamble and that is up to the individual, not inherently the stock. Just as walking itself is not inherently a gamble, but if one chooses to do so in the middle of an express way, then it becomes one by the will or ignorance of the participant. In this case the walker.

and where there is absolutely no chance of losing any of your original investment.
There are no riskless stock investments.

And I know you can place an open order to "sell if price falls below your original investment amount", but I doubt most people would do this, since it may likely be sold on the same day they make the purchase. More likely they would say sell if it falls around 15% below the purchase price, so they don't take a huge loss. So they would still lose part of their investment. Therefore, they took a gamble, and they walked away from the table, before they lost all their chips.
I don't know what point you are making here. People's feelings do not dictate the facts of the market and it seems you may be trying to make people's feelings or ignorance the foundation for changing the facts.

SamuraiCatJB

01-18-2005, 12:25 AM

There are no riskless stock investments.

not true... it is called insider trading, and it is illegal.

There are no legal riskless stock investments. :D :p

however, now you understand why people use insider trading even though it is illegal. It is an easy way to make as much as you can afford to make, providing you don't get caught. With every one that is caught, I would hazard that 3 slip through.

RD100

01-18-2005, 08:09 AM

Since Samurai and I have pointed out buying stock is not inherently a gamble, then I say all stock purchases are inherently not gambles.
Your above logic is based on the opinions of two people. I don't think many professors would give you a passing grade had you put this type of logic in a college thesis.

Unless one actively or ignorantly chooses to make the situation a gamble and that is up to the individual, not inherently the stock.
All stocks are gambles, since all stocks involve risk. Except for "insider trading" as Samcat pointed out.

As I said previously, "gamble" and "risk" are synonomous (http://thesaurus.reference.com/search?q=gamble).

Entry: gamble
Part of Speech: noun
Definition: speculation
Synonyms: action, bet, chance, fling, leap, long shot, lottery, outside chance, punt, raffle, risk, spec, stab, toss up, uncertainty, venture, wager

Source: (http://thesaurus.reference.com/help/about.html) Roget's New Millennium™ Thesaurus, First Edition (v 1.1.1)
Copyright © 2005 by Lexico Publishing Group, LLC. All rights reserved.

Just as walking itself is not inherently a gamble, but if one chooses to do so in the middle of an express way, then it becomes one by the will or ignorance of the participant. In this case the walker.
I've been trying to avoid these comparisons, and stick only to money related gambles. But you could make the case that anyone who walks, gambles with the chance they may fall. So all walking could be considered a gamble, if falling was the potential negative outcome.

There are no riskless stock investments.
Therefore, by my thesaurus.com quote above, all stock investments are gambles. :)

I don't know what point you are making here. People's feelings do not dictate the facts of the market and it seems you may be trying to make people's feelings or ignorance the foundation for changing the facts.The point I was trying to make about "putting in an open order to sell", is that there is a way to minimize or eliminate the "gamble" of buying stocks. But most people would not likely request a "sell price" at the same as the "buy price", because the stock will very likely trade below the buy price on the same day you purchase it. Prices vary up and down all day long, so you would have to be a very lucky person to buy a stock at the lowest price traded that day. And also, people who buy stocks aren't expecting the price to always go up. They are aware that sometimes prices may fall, possibly even below their buy price, but they plan to ride out these movements until the stock hopefully rises to an acceptable gain, before they choose to sell. And during the time they hold the stock, they risk (aka gamble) losing some or all of their investment (if the company goes bankrupt). That is why putting in an "open order to sell" at around 15% below your purchase price, is a good preventative measure, to minimize your loss. But the downside to doing this, is you reduce your opportunity to make money on the stock, since you may not give yourself enough time to be in the stock before it rises. It depends on how much of a percentage the stock typically fluxuates, and how much of a downward movement you can tolerate, while waiting for it to rise to an acceptable gain.

Tixx

01-18-2005, 08:47 AM

Your above logic is based on the opinions of two people. I don't think many professors would give you a passing grade had you put this type of logic in a college thesis.

All stocks are gambles, since all stocks involve risk. Except for "insider trading" as Samcat pointed out.

As I said previously, "gamble" and "risk" are synonomous (http://thesaurus.reference.com/search?q=gamble).

I've been trying to avoid these comparisons, and stick only to money related gambles. But you could make the case that anyone who walks, gambles with the chance they may fall. So all walking could be considered a gamble, if falling was the potential negative outcome.

Therefore, by my thesaurus.com quote above, all stock investments are gambles. :)

The point I was trying to make about "putting in an open order to sell", is that there is a way to minimize or eliminate the "gamble" of buying stocks. But most people would not likely request a "sell price" at the same as the "buy price", because the stock will very likely trade below the buy price on the same day you purchase it. Prices vary up and down all day long, so you would have to be a very lucky person to buy a stock at the lowest price traded that day. And also, people who buy stocks aren't expecting the price to always go up. They are aware that sometimes prices may fall, possibly even below their buy price, but they plan to ride out these movements until the stock hopefully rises to an acceptable gain, before they choose to sell. And during the time they hold the stock, they risk (aka gamble) losing some or all of their investment (if the company goes bankrupt). That is why putting in an "open order to sell" at around 15% below your purchase price, is a good preventative measure, to minimize your loss. But the downside to doing this, is you reduce your opportunity to make money on the stock, since you may not give yourself enough time to be in the stock before it rises. It depends on how much of a percentage the stock typically fluxuates, and how much of a downward movement you can tolerate, while waiting for it to rise to an acceptable gain.

I'm not sure how to take your "passing grade" comment other than to be a blatant insult for no other purpose.

My comment on all this here is that if you want to play a semantics game with the thesaurus and dictionary then that is your choice and have every right to do as you so please. Myself and Samurai have chosen to addressed the reality and facts of how stock and gambling work and pertain to today's world which we know semantics will not dictate.

Every action/inaction in life has risk which I have stated many times. I don't see the point of your argument anymore as it pertains to the workings of stock and gambling. I seriously am now only seeing your argument as merely wanting to win a semantics game which has no educational value for the thread starter or those reading it. This thread began as educational and I think it would be best to remain on that initial path. As has been pointed out, people need education on this subject, not a semantics debate to turn them off to it.

RD100

01-18-2005, 10:12 AM

:) I'm not sure how to take your "passing grade" comment other than to be a blatant insult for no other purpose. It was not intended as an insult, but to point out that you can't support proof of an argument based simply on your opinion.

My comment on all this here is that if you want to play a semantics game with the thesaurus and dictionary then that is your choice and have every right to do as you so please. Myself and Samurai have chosen to addressed the reality and facts of how stock and gambling work and pertain to today's world which we know semantics will not dictate.

Every action/inaction in life has risk which I have stated many times. I don't see the point of your argument anymore as it pertains to the workings of stock and gambling. I seriously am now only seeing your argument as merely wanting to win a semantics game which has no educational value for the thread starter or those reading it. This thread began as educational and I think it would be best to remain on that initial path. As has been pointed out, people need education on this subject, not a semantics debate to turn them off to it.Words have definitions for a reason. So people can communicate. If "gamble" is defined to mean the same as "risk" ... then that is what it is.

I am not trying to play a game with the dictionary or thesaurus. I am using them as a means to back up my argument. They are unbiased sources of information.

I haven't heard anything from you other than personal opinion, and an investor related website (ie. biased) to back up your argument. It seems like you want to change the definition of either "gamble" or "risk" to suit your needs for this discussion.

I realize our discussion wasn't the original purpose of this thread. But you didn't like that I used the word "gamble" in one of my earliest posts, and you chose to debate me on the topic. So I defended my choice of wording ever since. And I still stand by my argument ... that investing in the stock market is a form of gambling. :)

Tixx

01-18-2005, 10:37 AM

:) It was not intended as an insult, but to point out that you can't support proof of an argument based simply on your opinion.

Words have definitions for a reason. So people can communicate. If "gamble" is defined to mean the same as "risk" ... then that is what it is.

I am not trying to play a game with the dictionary or thesaurus. I am using them as a means to back up my argument. They are unbiased sources of information.

I haven't heard anything from you other than personal opinion, and an investor related website (ie. biased) to back up your argument. It seems like you want to change the definition of either "gamble" or "risk" to suit your needs for this discussion.

I realize our discussion wasn't the original purpose of this thread. But you didn't like that I used the word "gamble" in one of my earliest posts, and you chose to debate me on the topic. So I defended my choice of wording ever since. And I still stand by my argument ... that investing in the stock market is a form of gambling. :)

So in the end what do we get from the semantic arguement? We get you out there using terms/designations designed to scare average investors and mischaracterize investments and me out there working for Joe and Jane Client trying to undo all the misinformation and scare tactics being used with education so they feel comfortable enough to participate in the capitalist system for their own benefit along side the wealthy.

I guess it all depends upon what outcome one is trying to achieve here.

RD100

01-18-2005, 11:58 AM

So in the end what do we get from the semantic arguement? We get you out there using terms/designations designed to scare average investors and mischaracterize investments and me out there working for Joe and Jane Client trying to undo all the misinformation and scare tactics being used with education so they feel comfortable enough to participate in the capitalist system for their own benefit along side the wealthy.

I guess it all depends upon what outcome one is trying to achieve here.You are the one who feels I am mischarcterizing stock investments. I feel I am characterizing them correctly. We simply have a difference of opinion here. And I am backing up my opinion using the actual definitions of the words "risk" and "gamble".

I never said stock investing is bad. I would highly recommend it to anyone who could afford it. But I don't want people to think that the stock market is a "sure thing". It is a gamble. But it's one where you have the ability to influence your odds by doing research and tracking.

And just like when you walk into a casino, you know you have a certain amount of money you can afford to lose. You need to have the same attitude with money invested in the stock market. The only real difference is the time frame. In a casino, the events occur in a single day. In the stock market, the event can occur of a period of several years or more.

SamuraiCatJB

01-18-2005, 12:06 PM

sebring

01-18-2005, 12:11 PM

What makes investing a "gamble" is the fact that few investors have access to reliable, timely information on which to make informed, rational investing decisions. Most make their decisions are based on historical data, hot tips, broker recommendations (one of the most unreliable), momentum and active press coverage (read hype). Observe most of the pundits that get on the financial news channels. The vast majority of their recommendations are at or near 52wk, if not all-time highs (only useful for momentum players, not long-term investing). Recent history has showed that virtually every equity in the market is a timebomb waiting to explode. I'm not talking about the Enrons, Worldcoms or dot bombs, but blue chips like Ford Motor, AT&T, baby bells like Qwest, Eastman Kodak, Lucent Technologies once considered to be widow and orphan quality holdings, that have cost many investors fortunes and shriveled pension plan assets.

Tixx, you're sounding a little like a Bushite that would like to see Social Security turned over to the crooks on Wall Street.

For the record, I am an active investor that does his homework, but I am fortunate enough to have the time necessary to do the homework to, make relatively informed decisions, but every day something unexpected happens with some company that dramatically affects the price. Some positive and some negative.

sebring

01-18-2005, 12:30 PM

I also would like to stress that investing is risky, but gambling is by far the greater risk, by 10 fold usually. They are not the same thing.

I have to disagree. The risks with most casino games, not the machines, can be calculated by the player with precise mathematical accuracy, since all the variables are fixed and can be known (assuming an honest game, but then that's also a necessary assumption with investing). There are far more variables, many of which are completely unpredictable (virtually random) associated with "investments". Some company specific, but many others related to economic conditions, government actions, decisions made by customers or other outsiders, fickle consumers, international events, weather changes, and now terrorism to name a few. You could also equate the casino's EDGE with transaction costs in the investment markets.

I'm not advocating everyone run out and "invest" their life savings on the Blackjack table, but there are more similarities than differences between gambling and investing. Most gambling results are known much more quickly than investment results.

Tixx

01-18-2005, 12:35 PM

Tixx, you're sounding a little like a Bushite that would like to see Social Security turned over to the crooks on Wall Street.

That being a whole other issue, I really don't know where to stand on it at the moment as the devil will be all over those details. Either way I'm pissed that it has come to this because SS has been stolen from by current and past administrations and thus caused any funding problems that may exist in the nearer future.

RD100

01-18-2005, 12:43 PM

yes investing is risk, but it is not the same as walking into a casino. That is where we have a difference. would you offer the same advice on gambling in a casino that you would the stock market? "I would highly recommend it to anyone who could afford it."

That is where we have a problem. By equating gambling with investing, you also encourage people to go down to the nearest casino to get a return on their money. That is plain bad. You "can" win at a casino, but the odds at every table are designed in the house's favor.

I also would like to stress that investing is risky, but gambling is by far the greater risk, by 10 fold usually. They are not the same thing.
Just because both the casino and the stock market are both forms of gambling, doesn't mean they should be treated in the same manner.

A casino is a different form of gambling. The odds are not in your favor. So I wouldn't tell people to gamble in a casino on a regular basis, or to use the money as a source of income. But I would recommend it as a form of entertainment, using only a small amount of money.

But that doesn't mean that the stock market is not a form gambling as well. Day Traders treat the stock market exactly like a casino. But the average person trades stocks over a period of months or years.

But in both the casino and the stock market, you are putting your money at risk (aka gambling).

sebring

01-18-2005, 12:50 PM

This seems like a good thread to post the notice that "Blackjack PLS" is the free Handango app this week for the Palm OS. :D :p To help you with your "investing" decisions.

Tixx

01-18-2005, 01:03 PM

I never said stock investing is bad. I would highly recommend it to anyone who could afford it. But I don't want people to think that the stock market is a "sure thing". It is a gamble. But it's one where you have the ability to influence your odds by doing research and tracking.

yes investing is risk, but it is not the same as walking into a casino. That is where we have a difference. would you offer the same advice on gambling in a casino that you would the stock market? "I would highly recommend it to anyone who could afford it."

That is where we have a problem. By equating gambling with investing, you also encourage people to go down to the nearest casino to get a return on their money. That is plain bad. You "can" win at a casino, but the odds at every table are designed in the house's favor.

I also would like to stress that investing is risky, but gambling is by far the greater risk, by 10 fold usually. They are not the same thing.

Samurai hit it on the head. It is not logical to think you are doing people a favor, helping them or teaching them anything by mischaracterizing investments and scaring them in an extreme opposite way base on your feeling of individuals potentially believing the stock market to be a sure thing. What people may or may not believe does not and should not determine the facts of a given situation.

ucfgrad93

01-18-2005, 01:15 PM

You are the one who feels I am mischarcterizing stock investments. I feel I am characterizing them correctly. We simply have a difference of opinion here. And I am backing up my opinion using the actual definitions of the words "risk" and "gamble".

I have to say, I agree with Tixx. There is an element of risk to buying stock. However, by educating yourself, you stand fairly good odds of making money. Does that mean you always will? Of course not. But that is not the same as gambling.

When you gamble, the odds inherantly favor the house over the individual. That is not the case when buying stock.

RD100

01-18-2005, 01:56 PM

I have to say, I agree with Tixx. There is an element of risk to buying stock. However, by educating yourself, you stand fairly good odds of making money. Does that mean you always will? Of course not. But that is not the same as gambling.

When you gamble, the odds inherantly favor the house over the individual. That is not the case when buying stock.
It depends on what kind of gambling you are referring to. Slots, Poker, BlackJack ? You can teach yourself to play better BlackJack and Poker.

The difference with stocks, is you are betting typically a much larger amount at one time, which may be invested for months or years. And at any given moment during your investment period, the stock can lose 50% of its value in a single day. Look at the internet stocks. Or look at a drug stock where a drug is suddenly discovered to be harmful. You can't predict something like this, or even do homework to prevent from losing money. These things just happen as part of life. And that is the "gamble" you take when your money is in this type of investment.

RD100

01-18-2005, 02:00 PM

Samurai hit it on the head. It is not logical to think you are doing people a favor, helping them or teaching them anything by mischaracterizing investments and scaring them in an extreme opposite way base on your feeling of individuals potentially believing the stock market to be a sure thing. What people may or may not believe does not and should not determine the facts of a given situation.
See post #69.

Tixx

01-18-2005, 02:12 PM

See post #69.

See my response to post #69 in post #71.:)

RD100

01-18-2005, 02:28 PM

See my response to post #69 in post #71.:)
My response to SamCat's post #65 was my post #69.

Your post #71 is just agreeing with SamCat's post #65.

My post #69 stands on its own, as a reponse to both #65 and #71.

Long live post #69 !!! :)

SamuraiCatJB

01-18-2005, 02:48 PM

My response to SamCat's post #65 was my post #69.

Your post #71 is just agreeing with SamCat's post #65.

My post #69 stands on its own, as a reponse to both #65 and #71.

Long live post #69 !!! :)

looks like we all finally agree it is all a numbers game. :p

ucfgrad93

01-18-2005, 03:14 PM

It depends on what kind of gambling you are referring to. Slots, Poker, BlackJack ? You can teach yourself to play better BlackJack and Poker.

The difference with stocks, is you are betting typically a much larger amount at one time, which may be invested for months or years. And at any given moment during your investment period, the stock can lose 50% of its value in a single day. Look at the internet stocks. Or look at a drug stock where a drug is suddenly discovered to be harmful. You can't predict something like this, or even do homework to prevent from losing money. These things just happen as part of life. And that is the "gamble" you take when your money is in this type of investment.

Even if you teach yourself how to play the Vegas games, they still have odds that favor the house not the player. Thats not true for investing in the stock market. If you educate yourself, the odds are in your favor when investing in the stock market.

Your example of internet stocks and drug stocks are misleading. It would be like someone placing their entire bank roll on the number 7 in roulette. Most educated (or sane) people don't invest all of their money in those volitile segments of the market, just like they don't let it ride on a single number at the roulette wheel.

squeff

01-18-2005, 03:38 PM

Gosh, this has gotten heated.

This all comes down to what someone means when they "gamble" or "gambling." To some, it means "risk." To others, it means "something where the odds are against you."

When I say "investing is gambling," I mean that it has risk. Nothing more than that. And it's not intended to scare people away. It's intended to let people know that investing is never guaranteed to make you a profit. Nothing more and nothing less.

I'm sorry if you personally feel that this makes investing sound like a bad thing. It's not meant that way.

As for the argument that "other things, like walking, are gambling" is correct, but misguided. For a few reasons. For one, the topic here was investing (and, if you look back at the original message, it was about investing small amounts potentially in small "hot" companies). Not about walking. If someone posted a message saying "I'm thinking of taking a walk across the street. Is that a good idea?" I might reply "Watch out for the traffic... it's a gamble if you'll get hit or not."

For another, we tend to make societal assumptions. In this case, we tend to assume that most people know that it's risk (a "gamble") to run in traffic. Yet, there are plenty of people who don't know much about investing. And, based on actual behavior, some people have demonstrated that they don't understand the risks involved.

Tixx, it's not necessary to list all of the things that are risky ("gambles") whenever we mention one. Yet, your message seem to imply that you would have liked to see a disclaimer such as "Note: investing is a gamble, but so is eating, walking, driving, using an electric device, ..."

The reason, I believe, this discussion got out of hand was because Tixx said, bluntly, that investing is not gambling. Had you said, "Investing contain risk, even if done properly (which is VERY difficult for most people). However, I don't equate risk and gambling..." I don't think this discussion would have gone on this long.

I still believe, by the way, that a investment professional that tells a client "investing is not gambling" without following it up with "but it contains real risk" is violating the ethics of their profession, if not violating the law. Unless you know the person is defining gambling is a narrow way, of course. But, since this is a public forum, it's worth being clear that investing cariries risk, whether you call it "gambling" or not.

Also, as has been pointed out, some things we call gambling have very similar profiles to investing. For example, blackjack played by an "expert" is no more or less gambling than investing done by an "expert."

Lastly, gambling does not imply that you will lose. People do win when gambling. Gambling also doesn't imply that the odds are againt you. And, that, I believe is the root of the disagreement here.

RD100

01-18-2005, 03:49 PM

Even if you teach yourself how to play the Vegas games, they still have odds that favor the house not the player. Thats not true for investing in the stock market. If you educate yourself, the odds are in your favor when investing in the stock market.

Your example of internet stocks and drug stocks are misleading. It would be like someone placing their entire bank roll on the number 7 in roulette. Most educated (or sane) people don't invest all of their money in those volitile segments of the market, just like they don't let it ride on a single number at the roulette wheel.How can a random game such as BlackJack favor the house ? The dealer's hand is drawn from the same deck that your hand is drawn from. I believe the casino only benefits in this game when poor desperate card players are at the table, who hit on 15 and higher. Otherwise, it's just whoever gets dealt the best hand. And since the dealer has to stick at 17, he is not likely to make as many mistakes causing him to go over 21, as the other players at the table.

True the odds are more in your favor if you educate yourself in stocks. But you still run the risk of losing money if a stock tanks due to unexpected bad news. And it's not just internet and drug industries. It's any industry.

I realize that most educated people do not put all money in one stock. My point, which I keep repeating, is that any stock investment is a gamble, with the definition of gamble, being "taking a risk". No stock investment is a guarantee.

I think the disagreement we have, is because many of you have a predetermined and narrowly defined idea of what the term "gambling" means. You only think in terms of casinos, betting on football games, horseracing, and other high-risk bets. I believe to "gamble" means to "put money at risk", where you are uncertain of the outcome. In terms of the stock market, it can include very low-risk gambling, which I would include buying blue-chip stocks. And medium to high-risk gambling which I would include buying penny stocks and IPO's of relatively unknown companies.

squeff

01-18-2005, 04:15 PM

How can a random game such as BlackJack favor the house ? The dealer's hand is drawn from the same deck that your hand is drawn from. I believe the casino only benefits in this game when poor desperate card players are at the table, who hit on 15 and higher. Otherwise, it's just whoever gets dealt the best hand. And since the dealer has to stick at 17, he is not likely to make as many mistakes causing him to go over 21, as the other players at the table.

I could give examples, but one of the keys is that the dealer doesn't play until you stand. If you bust, no matter how good or bad his cards, he still wins.

Try this: get a friend (to act as the dealer) and play a simulated game. Both of you should play "stand on 17, hit on 16" rules.

As the "player," you go first. Remember, strictly play by the above rule. Don't worry about insurance, splits, or anything else fancy. Just play like the dealer would.

Once you stand, let your friend ("dealer") go. Give a point (or a penny) to whoever wins.

If you bust, your friend doesn't play. His cards should go into the discard pile without you seeing the down card. However, he gets a point because he "won" (meaning that you lost).

If you play a bunch of games, you'll see that your friend/dealer will end up with more points than you.

If you're both playing by the exact same rules, a large number of games should produce an equal number of points for both players. Right?

Wrong. Because your friend gets a point when you bust, despite the fact that he hasn't "played" his cards.

There are other factors, such as payoffs, that may put things in the house favor. Depends on the house and the payoffs.

Note that if you could count cards well and DIDN'T play by the "16/17" rule, you could actually do better and perhaps tip things more into your favor.

Another example is Routlette (US rules). Put one chip on red, one of black. Then, if red comes up, you lose the black bet. But you win the red one. That means you lose a chip and gain a chip. Net 0. However, if green (0 or 00) comes up, you lose both. So, over the long run, the house will win (based on the times that 0 and 00 comes up). It'll take a while, but this is a good way to get free drinks. You can play for hours and hours this way before you lose it all. Depending on the speed of the game, the minimum bet, etc., you might actually beat the casino on the cost of the drink. Maybe...

sebring

01-18-2005, 04:25 PM

SamuraiCatJB

01-18-2005, 04:41 PM

How can a random game such as BlackJack favor the house ?

well... since you asked. http://www.wizardofodds.com/games/blackjack/house-edge-calculator.html

yes, blackjack is specifically designed in its rules to favor the house. Not by much. If you notice no amount of changing the rules can reach a negative house odds. This does not take into account newer casinoes offering large deck shuffles to prevent counting through 8 decks of cards. As long as the house can restrict to the laws of statistics based on the rules of the game. they have a little less than half a percent in the houses favor every game, every night, every week, every year, every dollar spent. Which is why the house tries to prevent counting, increasing number of decks allowing the house to swap out decks at half-way points and other such extra rules to prevent the player from exceeding the original statistics as per designed in the rules of the game.

You confuse the idea of random with permutation. A blackjack game is not a random number generator, it is a permutation of statistics based on a probability distribution. The rules are designed so that that permutation of probability never goes in favor of the player in the long run. Thus it is always in the house's favor.

However, given that slots are allowed to reach as much as 4.5% in the house's favor, blackjack is at least less likely to loose as much.