Investing or gambling?
I am reading a book called 'Investing for Dummies'. Its about investments and the stock markets and it is very interesting, but what Im seeing and reading, seems to me to be that the stock market and investments around that, are just like gambling. There is no guarantee that you get your money back.
So what IS the difference between 'investments' and 'gambling'?
In layman terms -- delayed gratification.
People who gamble are doing it for entertainment, are willing to accept a complete loss (i.e. they expect to lose since the house has an edge), and most importantly, they want the thrill of immediate gratification akin to a high.
In contrast, investment is for a purpose, be it for retirement at the end of a career, or to save up for the down payment of a new car or house. There is a proven investment process called value investing espoused by Ben Graham that has created enormous wealth for its practitioners. While the stock market has built disadvantages such as a bid-ask spread and leakages such as commissions, numerous investors have nonetheless created wealth. Lastly, returns from investing activities accretely slowly but due to the 8th wonder of the word (compound interest), the dividends can be massive in the long run.
I hope this helps you to get a better grasp of investing as opposed to gambling.
24 May 2011 John Wiley & Sons rings the NYSE Closing Bell
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