Many people have asked if playing the stock market and gambling is not just the same thing. Two sides to the same coin. In both cases, you take your hard-earned money and buy something with it. These things that you buy stand the chance of increasing. You also stand the chance of losing your money and in both cases the outcomes are out of your hands.
When you look at it quickly, the two do seem very similar. There are however differences between them and though they might seem minor to the average Joe on the street, the two are in fact very different. The one thing that they will both agree upon is that the fact that in both cases, the person giving out starting money, is in fact taking a gamble. That does not mean they are gambling.
Investing At The Casino
As casino player, the way in which gambling works is pretty straight forward. We can all easily understand it. You take your money and buy chips or put it on a cash card. Step one, Check. You will then proceed to whichever game it is that you wish to play. Sit down and place your bets. You stand the chance if wining as much as what you stand the chance of losing. Your winnings can be big or small and your losses could leave you with nothing.
Gambling On The Stock Market
Now that we are sure we know how it work at the casino, lets see how that compares to the playing on the stock market. When you buy a, or many stocks on the stock market, you are in fact buy a piece of a company. You become a shareholder of said company from which you bought your stock. Some would argue that is the same as buying chips at the casino, but that is not quite the case.
Your stocks or shares that you have purchased can go up in value and they can go down in value. There are many reasons why this can happen. The economy is bad, the exchange rate is bad, gold took a dive, many people sold shares, the list goes on. There are then of course, reverse reasons for why your share could go up in value.
Irrespective of whether the value of your shares is going up or down, the number of shares that you have stays the same. They can only become more if you purchase more and they can only become less, when you sell some. It is simply the value of the shares that change. You make money by purchasing more shares when the value is low and selling some shares when the value is high.
Pack Up Your Chips
At the Casino you are forced to pack up and go when you have lost all of your chips. You then have nothing left, no value. This seldom happens in share. The value of the shares might be incredibly low and momentarily you have lost, but you still have the shares. As long as what you have them, they can go up again in value over time.