Current Events > "Playing with stocks is essentially gambling"

(+) Yeah! (+)

So that means everyone with a retirement account that have money invested towards ETFs and other growth stocks is gambling too since you're 'betting' that you'll make more money over the span of x decades from compound interest.
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Why is this a surprise? Seems like common sense knowledge to me
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WashYourHands posted...

Why is this a surprise? Seems like common sense knowledge to me

yikes
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Stocks aren't a game of chance. It's an opportunity for investors to get behind a product that they believe will succeed and reap the benefits if it does.

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Imagine if a start up found a cheap new way create, distribute, and store energy. Most people would lose their retirement funds.

Not gambling if you're a member of the Senate and can make deals and pass laws that will specifically benefit certain corporations.
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If you're doing short term trading with the hope of making a quick buck it is absolutely akin to gambling.

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Option trading is def gambling.

As is biotech.
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SK8T3R215 posted...

WashYourHands posted...

Why is this a surprise? Seems like common sense knowledge to me

yikes

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There's a huge difference between stocks and gambling, namely

Expected Return[Stocks] > 0

Expected Return[Gambling] < 0
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konokonohamaru posted...

There's a huge difference between stocks and gambling, namely

Expected Return[Stocks] > 0

Expected Return[Gambling] < 0

lol... portfolio management theory!

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Some of yall never heard of stock options
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take out the word essentially
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Playing with long term options isnt quite as much of a gamble, if you pick a solid company at the right time.

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I'd say FX is more like gambling than stocks. Stocks being residual equity interest in a company whose value is driven by future earnings/etc and expected to be positive over time in line with the expectation of economic growth (yes I've oversimplified this) vs FX which is a zero sum game.

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Kolibri X posted...

If you're doing short term trading with the hope of making a quick buck it is absolutely akin to gambling.

I have a friend who got into Crypto and in the first week he became a successful swing trader and his predictions have all come true. It's not gambling.
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Sad_Face posted...

I have a friend who got into Crypto and in the first week he became a successful swing trader and his predictions have all come true. It's not gambling.

Depends how you define gambling then.

Swing trading, day trading, technical trading, etc... its had many names before but theres no one who can predict all market movements with absolute certainty. Whether that is just a risk factor which can be calculated and managed, or whether a positive return becomes driven by luck, I guess thats the point at which it becomes gambling.

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It is, but life is a gamble.
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RedWhiteBlue posted...

My neighbor, and a few people here, do a much safer method of trading, currency trades. Replacing your income in 1-2 years, supposedly reliable. Curious as to how that works, and if automating it with a program is viable then why aren't so many people doing this?

Currency trading is NOT safer. It's actually far more volatile/risky due to the nature of it, as well as anyone doing it seriously requires significant leverage. I used to do quite a bit of this in my younger days but it led to some sleepless nights as you could wake up $100k poorer.

Anyway to answer your Q as to why people don't automate it - there's no 100% risk free/fail safe way to do it since you're punting on which way the wind blows and there could be information asymmetry where not all participants have access to same info at same time, and even as announcements are made, and people have built bots to do this in nanoseconds, they still can't all react/respond correctly everytime. Those who try to automate through algorithmic trading have been able to make good coin but once the market catches up (i.e. others try to replicate or compete with it), it falls apart and sometimes can cause a market correction/crash.

In the old days where markets weren't as efficient, there was plenty of arbitrage opportunities to take advantage of pricing differences between markets/time zones/etc but in modern times, there are far fewer firms specialising in arbitrage trading and they're largely technology companies now (i.e. you build new algorithms to identify an arbitrage opportunity). I remember attending a recruitment event about ten years ago at campus and the recruiter from Optiver (an arbitrage firm) started calling out random 2 or 3 digit numbers. He then read out a formula and asked us to put those numbers into that formula. Most of us figured out it was a formula of inputs into determining the butterfly spread but then he said, who can solve it in 5 seconds. I think only one person could and basically they got asked to talk afterwards about an interview.

Anyway just some ramblings. I used to be very interested in pursuing this (as do most finance students) but I ended up going into accounting, and now work in consulting for banking regulations instead :)


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