Is putting money on the stock market gambling or investing?

Can you put whether or not you have shares on the stock market apart from free ones from winfalls from companies becoming a PLC.

I'd like to see experiences in stock markets vs your reasons behind the answer you've chosen.

Its gambling. You could lose every penny you 'invest'. It can of course be legitimately described as an investment (and usually is) but it usually involves appreciable risk. It used to be said that investing in blue chip stocks did not involve a great deal of risk. These days even supposed blue chips can be a risky investment. My advice to any one of modest means, who cannot afford to lose money invested in the stock market, is to keep well away from it.

I suppose if it is a 'long term' thing, then it would be more appropriately called 'investing'. But if you're looking to make a quick buck then it would be more like gambling.

I had to invest some money a few months ago and the financial adviser started off by asking questions about what sort of risk taker I am. I don't want to take too many risks with money, but I also don't want to play it so safe that the likely returns will be negligable. So I fell into a 'medium risk' category. I invested half the amount in a 'safe' investment and the other half in a 'medium risk' investment - knowing that I could lose money as well as raise money.

I suppose investing in the stock market is always going to be at least a little risky, but some shares tend to be more stable than others.

It's always tempting to invest in something 'high risk' with potential big gains, and if I had enough money to play about with then maybe i'd take more risks and gamble a little.

I've always understood that what separates gambling from investing is the degree of pre-knowledge.
I would take pure gambling to mean taking an absolute chance------you have really and truly no idea if the even number is going to come up or the odd number-----or the red or the black.......and so on.....
Someone who deeply studies trends in the markets and the political situations that may affect those trends is obviously trying to buck the odds , so could hardly be called taking a pure gamble.
Like if you are in a completely unfamiliar neighbourhood and you say to your friend , " I bet the first cat we see when we go out is a black one "., well that's a gamble. If you know a large number of black cats live in that neighbourhood , well , you could almost call it an investment !

I agree with Fareast .You realy have to do your homework first, other wise you are just gambling.

I was brought up to think of it as gambling - as Lord Chaverly says you risk losing all the money you stake & both are money for doing nothing (if you're lucky enough to win).

Originally posted by Fareast
I've always understood that what separates gambling from investing is the degree of pre-knowledge.
I would take pure gambling to mean taking an absolute chance------you have really and truly no idea if the even number is going to come up or the odd number-----or the red or the black.......and so on.....
Someone who deeply studies trends in the markets and the political situations that may affect those trends is obviously trying to buck the odds , so could hardly be called taking a pure gamble.
Like if you are in a completely unfamiliar neighbourhood and you say to your friend , " I bet the first cat we see when we go out is a black one "., well that's a gamble. If you know a large number of black cats live in that neighbourhood , well , you could almost call it an investment !

definitely a spectrum activity.

but considering the whole creaky edifice can implode at any time, I would advise putting all your money into my new business venture, which is a dead cert, not a gamble at all. even remotely.

Dear Phan ,

As you advised ,I have sent all my savings to your new company ,

El Dorado Investments [ Unlimited ]

Carey Street ,

Panama City , Panama , GO 123 NE

Can you tell me when I will hear something as I tried calling your office in Sheffield and could only get a sort of loud buzzing noise.
Am I simply being too impatient ?

Yes , seriously , I think you're right that it is on a spectrum. No investment ,I suppose is a 100% safe and one usually has a 50% chance in simple gambling. The whole , "odds " thing is fascinating to me but I know very little about it.
It's too much , "off the topic " this ------but I've just become very interested in the odds of getting , "out " at patience ! ! Weird subject-----must be senility creeping up.

I have lived reasonably solvent for many years on investments. But I rely on a good broker on the NYSE who divests my money without my ever having to play the game myself. To rely on the steady 3 or 4% on long term Certificates would make me not very well off and frankly bored. I think one thing is to be patient when things start to look rough, like the recent heavy increase in petroleum costs, and ride out the storm.

It's throwing your money away.
Tried it - lost my t shirt.
Top Tip.
Get an ISA or put it into premium bonds in £5000 blocks.

people who invest in £5k blocks win more

Look at the evidence (http://www.nsandi.com/products/pb/winnerlist.jsp) :thumbsup:

Originally posted by Hels
I suppose if it is a 'long term' thing, then it would be more appropriately called 'investing'. But if you're looking to make a quick buck then it would be more like gambling.

I agree, Hels. The husband and I started investing in the stock market about 20 years ago. The very first stock we bought was some shares in a small trucking company based in Silicon Valley. A friend of his worked there, and advised us to buy some stock. The company was doing very well and had just gone public. We weren't then, nor are we now experts. There's no way we know enough to try and "time" the market.

We used dollar cost averaging http://www.investopedia.com/terms/d/dollarcostaveraging.asp and diversified, diversified, diversified. The various stocks we've purchased have gone up and down, but over time, they always go up. Dividends are automatically reinvested.

They always say buy what you love. If you like to run, buy stock in Nike. If you have pets buy stock in Purina or PetSmart. My daughter goes to Starbucks with her friends all the time, so we bought a few shares of Starbucks stock in her name.

And what happened to that little trucking company? It was bought by a bigger company, which was bought up by yet a bigger company, which was eventually bought up by FedEx. That $500 investment has turned into a nice sum. Hopefully, it will finance a good portion of, or all of daughter's college education.

Anyone interested in the stock market, investing, or money should read this book. The Millionaire Next Door. I believe Joe P is familiar with this book as well.

http://www.amazon.com/exec/obidos/tg/detail/-/0671015206/103-5213907-0268635?v=glance

:) Sierra

I have firm belief in my partner's advice in stocks and shares.
He always comes up smelling of roses.
He invests in the the things we use, i e
gas, elactricity, water. phone.
Whatever I choose myself goes down,
I'm the kiss of death to shares.

What did happen to Morrisons----- was it me ??
hazel

Thanks for the various tips, folks - might start thinking about making some investments myself!

I've only been interested in this kind of thing from a theoretical viewpoint till now, but have read a bit about it. The stock market as such (as opposed to bonds etc) is generally relatively risky, but does offer a range from what could be called gambling (punting on a few risky shares with the chance of big gains but an equal or better chance of being wiped out completely) to what could be called investment. As people have said, diversification seems to be the key to reducing risk.

Taking diversification to its conclusion I guess you could buy a "tracker", which follows a given index (e.g. FTSE 100) by maintaining an appropriate portfolio of the shares used to define the index. In the long run, following a high status index has always won out, but sometimes it can be a very long run - after a crash it can take over a decade for an index to recover, after taking inflation into account. That is exceptional, however. Of course there's always the chance of a major cataclysm, but you'd probably be badly affected by that whatever you'd done beforehand.

Originally posted by CaptainSwing
Thanks for the various tips, folks - might start thinking about making some investments myself!

I've only been interested in this kind of thing from a theoretical viewpoint till now, but have read a bit about it. The stock market as such (as opposed to bonds etc) is generally relatively risky, but does offer a range from what could be called gambling (punting on a few risky shares with the chance of big gains but an equal or better chance of being wiped out completely) to what could be called investment. As people have said, diversification seems to be the key to reducing risk.

Taking diversification to its conclusion I guess you could buy a "tracker", which follows a given index (e.g. FTSE 100) by maintaining an appropriate portfolio of the shares used to define the index. In the long run, following a high status index has always won out, but sometimes it can be a very long run - after a crash it can take over a decade for an index to recover, after taking inflation into account. That is exceptional, however. Of course there's always the chance of a major cataclysm, but you'd probably be badly affected by that whatever you'd done beforehand.

Diversification - i.e. spreading of risk - sounds like a good idea and generally speaking is. But even diversified portfolios can get hit hard in a stock market slump. We all know that markets are dynamic- they go up and down and always will. Knowing when to buy and when to sell is as important as what to buy and sell. Most investors don't have anything like the knowledge necessary to make accurate decisions concerning when, let alone what, to buy. During market upturns, some people, encouraged by certain sections of the financial services industry, get the idea that making large amounts of wonga through share trading is easy (hence the rise of private online traders during the dot.com boom. Most of these lost lots of cash). As for making money 'in the long run' as Keynes famously said, in the long run we're all dead. The greatest stock market crash in history was probably the Wall street crash of 1929. The Wall street index didn't recover to its 1929 level until around 1953.

I hold a number of different shares mainly in utility companies, and when the company I worked for floated on the stock exchange I received a number of free shares from them.

I also receive an annual share bonus and the option to pay small amounts each month into a savings scheme. At the end of the term, 3, 5 or 7 years) you have the option to buy shares at a pre-determined price or take the cash. For me this is a risk-free way of investing, because I know I will never lose money but will benefit if the price goes up.

This is an inland revenue approved scheme that most larger PLC companies probably offer. Check it out with your employer!


:)

Originally posted by Fareast
Dear Phan ,

As you advised ,I have sent all my savings to your new company ,
Can you tell me when I will hear something as I tried calling your office in Sheffield and could only get a sort of loud buzzing noise.
Am I simply being too impatient ?


Fareast, I wired you from my office in Managua, but I think the telegraph line is down.

Your investment is now being ploughed into our flagship project - "carrying on an undertaking of great advantage; but nobody to know what it is."

Taking your own money and using to buy shares on the stock market is gambling even if you are very knowledgable about them :)

Definitions:

- To take a risk in the hope of gaining an advantage or a benefit.

- An act or undertaking of uncertain outcome; a risk: I took a gamble that stock prices would rise.

It's just that some gambles are more risky than others :)

One of the salutory lessons about the poor level of public knowledge of finance, and about the recklessness and duplicity of certain sections of the finance industry, is the endowment mortgage story. Many who were persuaded to take out these mortgages probably had no idea that they were gambling on the stock market.

Buying and selling shares is gambling. However it is also an investment if it goes well.

The main trick about buying for investment is to spread the risk over different sectors. And leave them over a term of at least 5 years. Some go well and others don't but if you have chosen a good spread then you will gain overall. Also it's only "playing at it" unless you are talking about a portfolio of at least 10grand.

I amuse myself with a few shares worth only a few hundred, so that I am familiar with the ins and outs of the system, so that If i have bigger money to invest I know a bit more of what i'm doing..

And even though one of my companies has almost collapsed and died, overall the others have done well enough that I have made half of my original investment money over again.

Well.........I thought it was classed as investing until i had my shares decimated in the recent credit crunch!

In reality investment is a gamble, they are interwoven. Only 4 years ago property was considered to be an excellent investment. Who would tell you the same thing today?

I used to think of it as investing but after weeping over my losses in this recent credit crunch and the resulting free fall of my stocks and mutual funds, I'm leaning more toward it being gambling.

If the stock market were truly a level playing field, I'd have voted for "a bit of both".

Why it isn't (http://www.macdailynews.com/index.php/weblog/comments/16204/).

Risk works boths ways; it can go up and it can go down. Over the long run nothing goes up as much as shares but you can easily lose vast sums in a day. Unfortunately the human brain feels the pain of the downs a lot more than it enjoys the ups. Best thing to do with share investments is dump it all in some sort of passive equity index tracking fund and forget about it.

If you are buying existing shares from another shareholder you are gambling that the (hopeful) increase in value and dividend income you will receive will be greater than if you put your money in a bank, or did anything else with it

If you are buying new issue shares and the money goes to the company you are investing in that company, but you may still be gambling on the value of the shares increasing

It all depends on why you are buying them