Investing is not Gambling!

I was scrolling through my Facebook feed when I came across a comment that the stock market is akin to a huge legalized gambling den for the non-institutional investor. I think this is a common misconception, especially among the uninitiated that investing the the stock market is almost the same as going down to the two casinos. It may seem true in the short term, especially in periods such as now where market volatility reaches a peak, when people try to guess the next move of the market, but in the long-term I believe that the market is a weighing machine and is not all that unpredictable.

(Image source: https://pixabay.com/en/cube-gambling-card-game-570703/)

To start off, investing in the stock market is buying little pieces of companies that are able to easily be bought and sold by the retail investor. It's not like gambling where everything is left to chance, but instead, you can look up these companies and see their annual reports, or maybe even encounter some of them in your daily life. While the future is anyone's guess, you know you're getting something for the money you invest in, be it assets, earnings or growth potential (assuming these are just speculative stocks relying on the bigger fool theory)

Over the long run, investing is also more likely to give you positive returns while gambling usually ends up with negative returns. Just look at the STI, which has grown at a healthy rate for many years and may continue to do so for many years to come. Investing gives you the opportunity to take part in the growth in the company that you have selected and can pay you returns many times over if you have chosen a good company that is able to grow well, which may rely a little on luck but most good investment decisions are usually done deliberately, or you wouldn't have invested enough to make much right?

In gambling, on the other hand, it is more likely for you to lose money than to gain. Just look at the casinos, they are able to operate such nice facilities along with hiring many staff and still have a return on their initial investment already proves this point.

Investing may seem like gambling to some as they view it as a black box where money goes in and either comes out more or doesn't come out at all. Without researching on companies before we invest in them, investing, or more accurately speculation, is a lot like gambling, but investing doesn't have to be a game of chance and unlike gambling, the risks that we take are calculated. The wild and often unpredictable swings that the market goes through makes investing look like a game of chance, but over the long-term and with research, we can take out some of the guesswork from investing and allow it to be a sustainable way of growing our money.

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