Is investing in the stock market gambling?

[Guest]

Sorry, we should have opened this thread eons ago. We have hijacked the Rated "R" movies thread and it's about time we stop doing that.

So, here is my opening statement.

Stock Market investing is not gambling because by definition, gambling is when you wager money in the hopes of making more money without the benefit of "value". That means, you are buying "chance" which has no intrinsic value of its own.

Buying a stock is not wagering on chance because you actually gain ownership of something that has value. For example - if you buy a McDonald's stock, you are not buying the "chance" that McDonald's will make money, you OWN a piece of McDonald's that you hope will earn money in the future. It is the exact same thing as if you would have opened a McDonald's franchise.

If you wager on a game of poker - there is no value there. What is the product or the service? What did you buy with your wager? Nothing more than a "chance". Because, knowing how to play cards to increase the odds is not a product nor a service that has value outside of "chance".

Okay, anybody remember the dot-com stocks back in 2000? Remember how that bubbled and caused economic chaos? People who IPO'd several of those dot-coms were guilty of gambling. Because, there was no product nor service! A lot of the dot-com businesses was nothing but trying to put a fancy storefront for a non-existent product in the "chance" that people will buy into it!

So, investing in the stock market, in itself is not gambling. But, you can use the stock market to gamble that's for sure.

Here's a link that better explains why Stock Market is not gambling:

The 5 Biggest Stock Market Myths

Okay, let your thoughts be known!

Edited February 9, 2010 by anatess

[Traveler]

So paying taxes -especially Social Securiy is gambling.

The Traveler

[Seminarysnoozer]

By the sweat of your brow you will eat your food until you return to the ground. I think so long as one continues to be hard working and productive it is probably okay. I admit I don't know much about it, but I imagine that day trading is probably not good.

[rameumptom]

There is nothing wrong in ownership in a company, which is exactly what stocks are. First, however, before anyone tries out the stock market, I highly, highly, highly recommend you play the "stock market game" for a year. Just google that term, and you'll find about a dozen free online games. They give you about $50K in play money to use, and they use the actual market data. So you can blow $50K on the market, without losing anything.

This gives you time to save up money to actually spend on the market. It also gives you time to learn the market's ups and downs, ins and outs. You'll have the chance to chat online with others, seeing what works and doesn't work for them. This will also give you time to determine how you want to work the market: day-trader, trade once a month, trade once in a blue moon, etc.

You will also learn how to diversify your portfolio, so you don't lose everything on the next Enron (or Chrysler).

To succeed in the market, you have to stay in it, and be consistent in putting in funds every year. All it takes is one of your $5000 IRA investments to average 18%/year for 32 years, and you are a millionaire. It doesn't matter that another of your investments goes bust, and another is flat. The law of averages, if you research and diversify well, give you high odds of retiring with hundreds of thousands, if not millions, of dollars.

[bytor2112]

Investing in the stock market is not gambling. As I have shared at various times, I manage money for a living.......more than many small banks. You should invest in order to achieve a long term financial goal.....retirement income, wealth preservation, college planning, etc. That is the purpose of investing. Understanding that in order to achieve these type of goals, investing in the capital markets is critical to success. Seek advise from a reputable planner...it is well worth the cost.

[nbblood]

If you wager on a game of poker - there is no value there. What is the product or the service? What did you buy with your wager? Nothing more than a "chance". Because, knowing how to play cards to increase the odds is not a product nor a service that has value outside of "chance".

Ok, what about entering a golf tournament with the potential to win a prize? How is this different, say, from entering a poker tournament? Do we disqualify all sporting events that charge an entry fee for the opportunity to win a prize?

Poker is very much a game of skill, not chance. Sure there is an element of chance, but skill prevails. Anybody that doesn't believe that doesn't really know poker. How is this different from other events of skill?

[Just_A_Guy]

Why wait til tomorrow when I can start procrastinating today?

Ye saints, nbblood--for a minute there, I thought that said procreating!

[NeuroTypical]

Gambling involves creating a risk of loss where none would exist otherwise. If you don't gamble, you won't lose your money. Also, professional gambling is designed to force a certain rate of return for the gambling establishment. An occasional person gets lucky, but the community of gamblers lose overall. The purpose of gambling is to win.

Investing is choosing from a range of options (from hiding cash under your matress, to bank accounts, bo buying land, to buying parts of companies). The risk of loss is always there, no matter what you do with your money. The purpose of investing is to give your money something to do while it's sitting there.

Ok, what about entering a golf tournament with the potential to win a prize? How is this different, say, from entering a poker tournament?

No matter the outcome of the tournament, you will have spent your entry fee. It's not a risk, it's a certainty. The purpose of golf tournaments are competition and enjoyment of the sport.

LM's two cents.

(Daddy taught me to play craps at age 8)

[Justice]

Ok, what about entering a golf tournament with the potential to win a prize? How is this different, say, from entering a poker tournament? Do we disqualify all sporting events that charge an entry fee for the opportunity to win a prize?

There is a big difference between sports and gambling. If I must state it: Sports are played on equal ground. In Golf, for instance, everyone starts at the same place (or the place of their choosing in the tee box) and has to hit their ball into the same hole that lies the same distance away (give or take for handicaps). Cards or gambling never start off on even ground, and rely more on luck or chance to win (Bingo or slot machines). Argue all you want, but the fact that 52 different cards are dealt to random locations means its not even.

[Carl62]

Here's what BYU has to say about it: Gambling in Utah

[nbblood]

There is a big difference between sports and gambling. If I must state it: Sports are played on equal ground. In Golf, for instance, everyone starts at the same place (or the place of their choosing in the tee box) and has to hit their ball into the same hole that lies the same distance away (give or take for handicaps). Cards or gambling never start off on even ground, and rely more on luck or chance to win (Bingo or slot machines). Argue all you want, but the fact that 52 different cards are dealt to random locations means its not even.

I understand what you're saying, but I don't necessarily agree. Over the course of a poker tournament, for instance, any given player will have the same probability of having the same number of good hands. In other words, over the long term it IS even. It's how you play the hands that matters. Being able to win without a good hand, for instance.

Don't get me wrong. I'm NOT arguing that playing poker is acceptable (or not for that matter). I'm just pointing out an interesting conundrum.

You're argument is valid for any single hand dealt, but not over a long term. Over the long term, things are very much even.

[nbblood]

Gambling involves creating a risk of loss where none would exist otherwise. If you don't gamble, you won't lose your money. Also, professional gambling is designed to force a certain rate of return for the gambling establishment. An occasional person gets lucky, but the community of gamblers lose overall. The purpose of gambling is to win.

Well, I lost ALL of the money I invested in Delta Airlines and 99% of the money I invested in GM. I guess, by this definition, my stock investments were indeed gambling.

[Just_A_Guy]

I note the BYU article condemns options trading. Financial gurus: Would you consider selling a covered call to be gambling?

[Justice]

You're argument is valid for any single hand dealt, but not over a long term. Over the long term, things are very much even.

The idea isn't to average out the winnings, otherwise they'd pass out all the NFL teams Lombardi trophies now based on their odds of future winnings. Sports are different and unique each time, and so are card games. Each hand starts and is played out as a unique hand or game. So, you can't look at it as a bunch of statisical data, but what you do each time you play. The more luck involved at the beginning, like a random deal, the more it leans toward gambling. When things start off evenly, then it leans more toward skill.

[bmy-]

Things like poker, forex, sports betting, stocks.. they all take skill and hard work.

Edited February 9, 2010 by bmy-

[john doe]

Well, I lost ALL of the money I invested in Delta Airlines and 99% of the money I invested in GM. I guess, by this definition, my stock investments were indeed gambling.

No, they were investments that went bad. Investments are designed with the aim of making money for everybody involved, not just some of the people who put money in the pot. When you invested your money in those companies, there was not another person placing a matching amount hoping that you would lose, was there?

Gambling is designed for the 'house' to win out ultimately. I used to get a chuckle out of the billboards advertising slots giving returns of 'up to 97%'. That means they are guaranteeing that they have built their profit into the system and adjusted the odds and the slots so that they will always come out on top in the long run.

My wife was telling me she was reading about the new hotel Trump built in Las Vegas. It has no casino, but the rooms are very expensive. Without a casino making a huge profit to subsidize the cost of the rooms, the guests have to pay fair market value for them.

[Suzie]

So, investing in the stock market, in itself is not gambling. But, you can use the stock market to gamble that's for sure.

I agree. I posted this quote in the other thread:

I further suggest that the same spirit of gambling, the same reckless wagering on the chance turn of events, characterizes some forms of investments. The same evils that attend a throw of the dice for money can attend the person who casually puts his money on a highly speculative stock or commodity investment. I know of no better test in this area than that suggested by President Joseph F. Smith, who remarked:

“The element of chance enters very largely into everything we undertake, and it should be remembered that the spirit in which we do things decides very largely whether we are gambling or are entering into legitimate business enterprises.”

LDS.org - Ensign Article - The Evils of Gambling

[nbblood]

The idea isn't to average out the winnings, otherwise they'd pass out all the NFL teams Lombardi trophies now based on their odds of future winnings. Sports are different and unique each time, and so are card games. Each hand starts and is played out as a unique hand or game. So, you can't look at it as a bunch of statisical data, but what you do each time you play. The more luck involved at the beginning, like a random deal, the more it leans toward gambling. When things start off evenly, then it leans more toward skill.

This is not true. There are tournaments. It is a collection of many hands. You get nothing from hand to hand. You very much can look at it as a bunch of statistical data. Your argument is not valid in regard to tournaments. Prizes are awarded based on the place finished in the tournament, not averaged out and everybody gets a piece as you imply.

I gave up poker because I don't think it's in tune with the gospel. But not for the reasons you state. When I did play poker I very much hoped for players with your understanding to sit at the table, because they very clearly did not understand the skill aspect. There's a reason why the same players are successful over and over and the same players are unsuccessful over and over. It's NOT because of luck.

Anyway, we can agree to disagree. Again, I don't think poker is in tune with the Gospel. It is addictive and stimulates qualities such as greed, resentment, anger, etc. In fact it is a breeding ground for it. But it certainly is not gambling in my mind. It is a game of skill.

That's all. I've probably given it more time and publicity than it deserves already.

[nbblood]

No, they were investments that went bad. Investments are designed with the aim of making money for everybody involved, not just some of the people who put money in the pot. When you invested your money in those companies, there was not another person placing a matching amount hoping that you would lose, was there?

Gambling is designed for the 'house' to win out ultimately. I used to get a chuckle out of the billboards advertising slots giving returns of 'up to 97%'. That means they are guaranteeing that they have built their profit into the system and adjusted the odds and the slots so that they will always come out on top in the long run.

My wife was telling me she was reading about the new hotel Trump built in Las Vegas. It has no casino, but the rooms are very expensive. Without a casino making a huge profit to subsidize the cost of the rooms, the guests have to pay fair market value for them.

lol....I agree. I was just stirring the pot.

[Guest]

Ok, what about entering a golf tournament with the potential to win a prize? How is this different, say, from entering a poker tournament? Do we disqualify all sporting events that charge an entry fee for the opportunity to win a prize?

Poker is very much a game of skill, not chance. Sure there is an element of chance, but skill prevails. Anybody that doesn't believe that doesn't really know poker. How is this different from other events of skill?

Just because you are a skillful gambler doesn't make it any less a gamble. The presence of skill has no bearing on the definition of gambling.

Okay, so why is a sports game not the same as a poker game?

Let me present this first: If the money you get from a game of poker comes from people paying you to play poker to provide entertainment to an audience, then you are not gambling. You are earning a living. The entertainment part has value that people are willing to pay for.

This would be the same as showcasing your skill at golf at a tournament. You do not play golf to wager your money that you will win the pot. You play golf to provide entertainment to an audience and you are paid the money in relation to the amount of money people pay (in advertisement or seat tickets) to watch you play. You do not win all the wagers. You get a cut of the ticket/ad sales.

Now, if what you do is put in a wager, then play poker with utmost skill to win all the wagers on the table, then that is gambling. Because, there is no inherent value to a card game. It does not provide a product or service.

Edited February 10, 2010 by anatess

[nbblood]

Just because you are a skillful gambler doesn't make it any less a gamble. The presence of skill has no bearing on the definition of gambling.

Okay, so why is a sports game not the same as a poker game?

Let me present this first: If the money you get from a game of poker comes from people paying you to play poker to provide entertainment to an audience, then you are not gambling. You are earning a living. The entertainment part has value that people are willing to pay for.

This would be the same as showcasing your skill at golf at a tournament. You do not play golf to wager your money that you will win the pot. You play golf to provide entertainment to an audience and you are paid the money in relation to the amount of money people pay (in advertisement or seat tickets) to watch you play. You do not win all the wagers. You get a cut of the ticket/ad sales.

Now, if what you do is put in a wager, then play poker with utmost skill to win all the wagers on the table, then that is gambling. Because, there is no inherent value to a card game. It does not provide a product or service.

Aha....and that is the reason why I think poker doesn't meet in tune with what is right. It is simply trying to get the other person's money. You said it more eloquently than I could. I agree with what you've said here. This is why I ultimately gave up poker. Nobody can convince me it is "gambling", to me that is simply a game of chance, which poker most certainly is not. But it most certainly is not a "righteous activity" for the very reasons you point out. At least that's the way I see it.

Anyway, I agree (mostly). Very well said.

Edited February 10, 2010 by nbblood

[Guest]

True story:

Last Christmas, I sent out 5 scratch-off tickets with my Christmas cards. I got reprimanded by several people because of the gambling aspect.

My intent was not for the gambling, but for the fun of surprises. I love scratch-of games. No, not the lottery ticket - the ones that come as inserts with some publications or sometimes from burgers and fries. I love it, not because I can get a free cheeseburger if I win - but I just love hitting that matching pair! It's fun! I was trying to share this same experience with friends and family, hence the scratch-off tickets - I couldn't think of anything else that has scratch-offs.

Now, a lot of these tickets went out of state - so, the only way they could have claimed a prize was if they drive to Florida to claim them. So, obviously, the intent was not to win money. And besides, I was thinking, if it is a gift, then how can THEY be gambling?

Anyway, I got rebuked by several people. Some of them said I supported a gambling establishment, some said something about the appearance of evil. I agreed after a while of debating it. Although my intent was pure, the feelings it invoked was not good. I learned my lesson.

[Moksha]

Just because you pay your money in hopes of winning a large pot does not make it gambling if enough religious people play the stock market. I mean, if they are willing to ante up their chips for a good stock tip, then who are we to complain if the either hit the daily double or come up without a full hand? It's their own fault if they bet the ranch, right?

'Nuff said.

[Justice]

This is not true.

The cards are dealt randomly. That makes it uneven. I'm not saying skill doesn't play a part, but the "playing field" is not even at the start of each hand.

You can quote statistics and progression over time, but I am talking about playing a game. Anything will balance out overtime. But, I'm saying the odds are not even once the cards have been dealt.

[nbblood]

The cards are dealt randomly. That makes it uneven. I'm not saying skill doesn't play a part, but the "playing field" is not even at the start of each hand.

You can quote statistics and progression over time, but I am talking about playing a game. Anything will balance out overtime. But, I'm saying the odds are not even once the cards have been dealt.

You're simply not going to convince me that it is not even and I'm not going to convince you that it is, so we'll just have to agree to disagree. I'm ok with that. Two different perspectives for people to consider. Both with valid arguments. I'll leave it at that.