Y do people say that investing money in stock market is similar to gambling?

1. 38

   kartik ahirposted 12 years ago

   Y do people  say that investing money in stock market is similar to gambling?

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2. 60

   duffsmomposted 12 years ago

   Because the stock market is very volatile and returns cannot be guaranteed.  A person can do tons of research, and investigation on a good stock and still it can drop like a stone due to unforeseen circumstances.

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3. 68

   LandmarkWealthposted 12 years ago

   Because most investors have a very limited knowlege of how financial markets work.  The stock market clearly had volatility.  Yet is is nothing like gambling in a casino.  Those that understand how asset classes correlate understand that for most people not having any exposure to the market is the real gamble.  In reality there is no such thing as a riskless place to hold money.  If you sit in cash you have inflation risk.  If you own only fixed income you have both some inflation risk as well as interest rate risk.  The stock market has more principal risk.  The combination of all assets together in their proper proportion is what produces the least amount of risk over the longer run.

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4. 61

   Imoreposted 12 years ago

   People say that investing money in stock market is similar to gambling because they think money is made or lost in the stock market as readily as in the gambling house.
   
   The people who made this statement do not understand the stock market. All they know about stocks is that money can be made or lost.
   
   In the stock market you can search for profitable companies that have scope for growth and which are selling at bargain prices.
   
   The greatest difficulty is to determine the intrinsic value of the company. Once this is done, compare it with the present market price. If market price is two thirds or less of intrinsic value, you have a bargain stock which has great growth potential.
   
   Gambling gives less edge over the system. The odds are highly in favor of the business doing the gambling, and not the gambler.

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5. 63

   Cruncherposted 12 years ago

   There are some similarities. In both gambling and investing in the Stock Market, you can lose the money you put in. And if you are trading stocks over the very short term, most of the money you make is from "random" unpredictable fluctuations in prices, a bit like gambling.
   
   But there are also important differences. If you invest in the stock market for the long term you would expect that the companies you own a stake in would make profits and share some of that with you - not true with gambling. In gambling, over the long term, the "house" always wins.
   
   You have to remember that nothing in investmenting (or in life in general) is really risk free. Successful investing is all about understanding and being comfortable with the risks you are taking.

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