When people who do not invest think about investing, they often call it nothing more than gambling. In many ways, this type of view is warranted against investing in stocks because of how many people approach the stock market and investing in it. Buying stocks online has made this notion even more common among people who do not invest in stocks. However, how true is it? Is there nothing more than gambling when one is investing in the stock market?

How it is Similar

Well, first let’s look at how similar investing and gambling is. Really, what is the difference between buying and selling stocks and gambling? Both investing and gambling share many common threads. First of all, you are putting money down on something hoping you will get more money back in return. For example, when you are buying your own stocks, you buy 100 shares of a company at $10 per share. This costs you $1,000. Now, you are hoping that you can then sell those shares for more than you bought them. If those shares increase in value by 10 percent, you make $100. If the shares increase in price by 50 percent, you make $500. If the shares increase by 200 percent in value, you make $2,000. Now, you spent $1,000, and you sold for $3,000. That gives you a good profit.

This is what you want out of buying stocks directly. Of course, things can go the other way as well. Now, if you buy those same stocks for $10 per share, and the value of the stock goes down to ten percent of what it once was, you will lose $900 on your investment. This means you paid $1,000 and you came away with only $100. If that does not describe gambling we don’t know what does.

Of course, it is very important to state that while this seems like gambling, it is based greatly on how you approach it.

How It Is Different

When you go to a VLT, no matter how hard you research the VLT, no matter how much you know about the VLT, the VLT is still going to take your money. When you go to a slot machine, the same thing applies. It is all luck. Even poker, blackjack and roulette are based on luck, not talent. Yes some people can be better at it than others, but research does not help you when you are gambling at a casino.

Now, when you are investing, you are not going on blind luck. If you do, you will probably lose more than you win on the New York Stock Exchange. However, if you research companies, determine which ones are doing well, which ones are releasing new products and which ones are falling behind; you can begin to determine what stocks will do. This is how someone like Warren Buffett was able to make billions on the stock market, because he knew how it worked and he researched as much as he could. When you research what companies are on the stock market, you listen to advice and you pay attention, you can do very well on the stock market.

No matter how much you research the slot machines, even if you talk to the person who invented the slot machine, you will do no better. It is all just random and based on luck. In fact, the odds are stacked against you when you gamble, but this is not the case with investments. People do not make their career gambling, unless they are really good, but many people make their career investing.

So in the end, what is the difference between buying and selling stocks and gambling? Well, buying and selling stocks is based on research, timing and knowing how to invest, while gambling is all about luck and hope. If you have to choose to put $1,000 on the stock market or $1,000 on the roulette table, then you should choose to put the money into the stock market because you can make more money that way. Otherwise, you will lose it all on the roulette table at the casino.

Author Bio: Scott Bradley is a professional investor, who has been investing for over 40 years. What Are The Advantages Of Buying Stocks

Category: Finances
Keywords: stocks, investing, buying stocks