Crossing the street at a crosswalk with the light IS a form of gambling. That's why they tell you to look both ways before crossing. The odds are very good that you will be fine, but there are enough impaired drivers out there that there is always the chance that you won't. I have not one but two relatives who were hit by moving vehicles wile they were stationary, waiting for a red light to change.avalpert wrote:By that definition crossing the street at a crosswalk with the light is a form of gambling - you're welcome to use the word that way but I don't think it fits with common usage.Scooter57 wrote:Investing in the stock market is most definitely a form of gambling. The odds are quite good, which is why it's worth pursuing, but risk really is risk, and there is no guarantee that if you follow any investing strategy you'll come out with a predictable return.
So yes, a lot of what we do is gambling, but what differs are the odds. The odds of crossing the street safely are high, a lot higher than profiting long term from investing in the stock market. The odds of profiting in the stock market are a lot higher than the odds of winning a fortune at the slots.
Analysis of past performance suggests that investing in a total market index fund will produce better profits than stock picking over a period of decades (though not necessarily over a shorter period, for example five years.) But analysis of past performance also reveals there are stretches of time, some lasting a decade or more, in which stock investments don't out perform a portfolio 100% invested in fixed income.
A lot of how well you do depends on when and how you invested. A lump sum put in in 1929, 1999 (in a Nasdaq fund), or 2006 in a Developed Market Index might have severely underperformed a long CD ladder.
So yes, investing in stocks is a gamble, and it helps to know the odds so that you don't have to learn them the hard way--when you need to spend the money you had invested 100% in stocks.