Is stock trading technically a form of gambling?

by David Jenyns on May 6, 2012

Question by asuku t: Is stock trading technically a form of gambling?
This game always favors those in control of the stock rather than ordinary investors.
Today they decide the stock is up and tomorrow it is down.
These master gamblers are super rich while ordinary investors are loosing their money.
Is stock trading not a gambling affairs?
What exactly are we buying apart from the speculations of the stock traders?
Just lost 20 k and not sure to whom?
Should anyone still be buying these people’s speculations?

Best answer:

Answer by stephenweinstein
You lost it to whomever sold the stock that you bought.

No one is really in control. No one decides which days the stock goes up and which days it goes down.

The “master” investors/speculators who have the most influence/control are not getting rich. Many of them have lost millions, or even billions, in the last year. If you only lost $ 20,000, you are doing better than they are.

Add your own answer in the comments!

Beau.Gus May 6, 2012 at 11:46 am

You misunderstand the nature of stock ownership…if you own a share of Microsoft, in a very real way you own a tiny chunk of that Corporation…”they” don’t decide whether a stock goes up or down, YOU do, based on your actions as a buyer or seller…

So no, it’s nothing like “gambling”…

And you have not “lost” a single penny until you sell and so “lock in” any downward fluctuation in a share’s price!

ki k May 6, 2012 at 12:08 pm

Stock market is good and safer than forex trading. My expiriance in market is from 2 years and i earn good profit. Good luck.
If you have a little time you can review my blog, there is all what i learned
Regards

mntndo May 6, 2012 at 12:16 pm

“These master gamblers are super rich while ordinary investors are [losing] money.” Warren Buffet isn’t ordinary and he lost 25 Billion, as did many billionaires. Mutual Funds, even conservative one’s are down 30% or more. If any so called master gamblers are making money it’s because they are smarter than the public. I don’t buy into the gambling theory, that’s like saying the odds of most companies making a profit aren’t very likely the majority of time. We also know in the long run the stock market has better returns than any other investment. Where’s the gamble in that?

tjfinvestor May 6, 2012 at 12:56 pm

It can be if you don’t do your homework.

Space Invader101 May 6, 2012 at 1:09 pm

Yes. However, you can create better odds than in a casino if you respect the market and risk management.

If you want to invest in the stock market and not gamble, then forget about price movement. Find quality profit making companies that pay dividends. Then you’re really buying an asset, thus an investment.

You wouldn’t buy rental property without having tenant. So why invest in companies that don’t pay dividends? If you buy and continue to hold quality stock in companies that continue to generate profit and pay good dividends then you’re return on investment isn’t the share price, but the accumulation of dividends from your purchase price.

In a nutshell: If you’re buying low and selling high then yes, you are gambling. If you’re accumulating stock in several quality companies to build a second income stream through dividends, then you are investing. I have 2 seperate trading accounts so I can do both.

You won’t get super rich by investing in the stock market, but you will at least be able to sleep at night.

Spike May 6, 2012 at 2:03 pm

Stock Trading is not gambling if you have knowledge. Buying financial stocks before the TARP was in place was gambling, but buying the USO (crude oil) ETF when crude was under $ 40 was smart. The demand for crude isn’t going to diminish for years. It may not triple like it was last summer, but it could double again.

Buying consumer staples companies with a dividend of 4% or more isn’t sexy trading but you won’t lose your shirt. If these funds are in a 401k you don’t pay taxes.

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