I find this topic boring. Too many people think that investing in stock is gambling so I thought it would be make a good post. I hope not to bore you.
Google your own definition of Gambling if would like, my definition is below
Gambling: placing a stake (wager) on a game of chance with the hope of a positive outcome.
Don’t be confused with the casual use of the word ‘gamble’ which is often chosen to describe any action or situation involving risk. It is a gamble to drink 10 shots of tequila at 1am when you have work the next day but this is not gambling now is it?
Here are the 6 points:
The gambling industry is regulated by the Gambling Commission. The stock market is regulated by the Financial Conduct Authority & the London Stock Exchange Group. Nice easy start.
2. Time frame
When gambling, it’s usually a bet on a one-off event e.g. who will win the fight? Who will be top goal scorer in the tournament? Will Donald Trump be impeached during this office? The stock market isn’t so time sensitive, when you make a stock market purchase you can keep the stock or sell it whenever you want, which segway’s nicely to the next point.
You enter the stock market by purchasing shares of a company. Some pay a dividend and some don’t. either way, you own a tiny piece of a company. Gambling has no answer to this. At best, a casino can give you chips to cash in. Weak.
4. Team Goals
Wouldn’t gambling be more fun if you didn’t know the house wants all your money? They want everything from you. How ever well they try to dress it up. It’s you vs the house with rules that they make and odds that they decided. No team, your nightmare. Now if I purchase shares in HSBC, the board have an obligation to try and make me happy as a shareholder. They want HSBC to succeed as do I. team goals fam.
5. Minimising L’s
Both the stock market and gambling involve taking loses. The big difference though is with the stock market you can control and automate what your loses will be. It’s called a stop-loss order. Usually with gambling you either win money or lose everything you put at stake. W or L. there are some exceptions: online sport betting now has cash out options, the zero on a roulette wheel (although this is such a con the zero is not included in the odds your betting on but It can still take halve your stake!) etc.
You can buy multiple different stocks to de-risk your portfolio. Ever tried a multiple bet? Your odds generally get worse. The more you gamble, the more money you put to risk
The stock market and gambling both involve risk. this does not make them the same. Leaving the house involves risk as does smoking cigarettes. Gambling should be for entertainment purposes if done at all. As gambling mostly is a waste of money and can be addictive I’m against it and do not encourage it. On the other hand, the stock market is a great way to build wealth and increase assets.
With such similarities can the two be combined in a worthwhile way?
Buying gambling stock
Instead of gambling yourself, why not try to profit from those that do. Some notable public betting companies are below
- Ladbrokes Coral Group (£1.13 per share*)
- PaddyPower Betfair (£80 per share*)
- William Hill (£2.53 per share*)
- The Rank Group – owner of Grosvenor Casinos and Mecca Bingo (£2.27 per share*)
(*Please note, these prices are correct at time of publishing this post)
This is betting on the price movement of a financial asset. I have not tried this so I can’t say too much. It’s basically betting on how much a financial assets price will change aka gambling.