These days, in 48 states, gambling is a legal form of gambling.
The stock market is not only legal, it is also moral, in contrast to casino-type gambling. Its purpose is to participate in, and facilitate, business activity that has the effect of providing necessary goods and services to the public. It is a long-term activity that encourages thrift. Gambling, on the other hand, seeks to enrich the player who plans to give nothing in return, but far more often enriches the casino, who likewise plans to give nothing in return aside from marginal contributions to help justify their existence. It discourages thrift.
Night and day.
Not to say there aren't foolish people who play the stock market in an idiotic fashion that closely resembles gambling, but I would consider that an abuse rather than the raison d`etre of the stock market.
Thank you, Randy! I'm going to be getting my series 6 & 63 licenses soon, so would hate to have to feel guilty about something I was doing for a living! (Investing for others, not myself.)
-- Edited by Spotted Horse at 21:40, 2006-08-29
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"Look back on our struggle for freedom, trace our present day's strength to its source, and you'll find that man's pathway to glory is strewn with the bones of a horse."
- Anonymous
Well, Randy is correct in the thought pattern, but the way stocks and many investment vehicles are touted to the consumer, it really comes off as nothing more than a get rich quick scheme. Since there is no guarantee that any portfolio based off publicly traded stock is actually going to make money long term or short term, the risk does equate to a gamble. It is just the gamble over the long term has data to back up that usually the one putting the money up to the table will realize about a 12% return.
For some people, I think the same rush as gambling in games of chance (where the odds of return are very slim) is at play when they play the stock market.
As I am a risk averse investor (when I do have disposable income that could be considered for investment... yeah, like that ever happens!), I tend to prefer things like government bonds...
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It seems to me the only thing you've learned is that Caesar is a "salad dressing dude."
The stock market is gambling the way anything in life with risk attached is gambling. Higher risk=higher potential return. There are parts of the stock market with higer risk than other parts. I would tend to label people who sell calls without the stock to back it up gamblers. People who choose sound companies and diversified portfolios are investors.
In a way, a casino is the same principle. The potential return is very high...but comes attached to a very high risk of losing it all.
No, actually if you look for the long term, investing is just that, investing. Gambling indicates a degree of chance. Careful long term investing has some risk but is mostly investing. Gambling I puts my money down and based on luck of the draw, the dice or the bouncy ball, I may or may not make some money for nothing. Investing, should be, I take my money, carefully evaluate the companies out there, pick some that have potential for growth. I invest, in the company, the company takes the money I invest and uses it to conduct it's business. If I've picked semi-carefully, the company will experience growth and profit.
This growth and profit will benefit me in either of two ways, first the company returns some of it's profits to the shareholders in the form of dividends. Second the performance of the company indicates to others that this may be a good investment as well. This leads other to try to buy the stocks, as the company only has just so much stock available, the desires of others to buy the stocks will lead to an increase in the market value of the stock.
Up to this point it's fairly straight forward. The risks are very manageable, out side of disasters or other economic disruptions, that even top notch management can't really prepare for or compensate for. But as a company continues to grow in popularity with investors is when the real risk factor comes into play; Speculation.
Speculation is when it really becomes risky. No longer is the value of the stock based on performance and solid economic factors, but is instead based on sheer popularity pushing up the purchase cost of shares.
That said however, longterm investing in the stock market is extremely reliable. Averaged over time, the stock market has continually grown in value, even during the major downturns, most of which were corrections of over inflation of values due to speculation.
Invest carefully for time and it's a good solid investment, not a gamble. Invest for day trading and it is a gamble.
So... where does "investment strategy" end and "speculation" begin? What is that fine line?
We've seen a lot of shareholder wealth just evaporate overnight that turned out to be nothing more than "value" and smoke and mirrors for Wall Street traders.
I even saw that with my own employer, a Fortune 100, which has been around for a considerable time. All the stock options I and every other non-executive U.S. employee had been awarded over the previous two years in lieu of cash bonuses for work well done in "making the company great" were suddenly out of the money with no way of ever coming close to being in the money again. And the executive officers who came up with the schemes and stretched the truth to Wall Street walked away with tens of millions apiece in compensation before they could be fired and even when they were fired since they had gotten it written into their contracts. Oh yes, it sure was nice to know that our annual bonuses went to make sure a handful of people who just about ruined the firm got their return from the stock market.
So, how much has the Sarbanes-Oxley law actually "fixed" things to protect the investors in the stock market?
Let's just say, although I own some stock, not one share of it have I purchased with my own money. Therefore, I could sell it at any price and have a return. I have no risk with any of it.
There is no such thing as risk free investing. Even putting your money in the bank in a savings account carries a certain risk.
The stock market is speculation, because the trader is speculating that the price of the stock will increase and/or the company will pay dividends. Or if they are shorting, the trader is hoping the stock goes down from what he/she is selling the shares he/she doesn't really own yet so that he/she doesn't have to pay as much for the actual shares as they sold the virtual ones for.
There is no guarantee, because if the winds turn south for a company, holders of common stock are the last investors of a firm to be paid anything. Long term investing in stocks, is indeed more solid and reliable, but it is still a gamble and speculative. That is where hedging comes in and the effect of time smoothing out the ups and downs into a trend. Most people do not have the information necessary to do it on their own, hence the portfolios and managers. They then do the "card counting" for the investor. But even then, they are still anticipating or speculating what the future will hold one day from now, one week from now, one month from now, one year from now, etc. and spreading risk over a variety of opportunities.
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It seems to me the only thing you've learned is that Caesar is a "salad dressing dude."
)
Thank you, Randy! I'm going to be getting my series 6 & 63 licenses soon, so would hate to have to feel guilty about something I was doing for a living! 
(Investing for others, not myself.) 
