Gambing Revisited

Submitted by Marco Palmero on 10 May, 2006 - 22:03

Trading Stocks is Gambling After All... So Why is Gambling Bad?

I want to return to the question of share trading being gambling. Is share trading gambling? Previously, I argued that share trading comes pretty close to the definition of gambling, but the fine line is that share trading often involves a business plan and a risk management scheme. Others may argue that professional gamblers have these two elements at play. They have a plan of attack - their game, and a risk management strategy. I was reading this article about Joe Hachem who won the World Series of Poker in Las Vegas last year. Here's what this professional poker player said: "To me, it's a business," Hachem said. "Over the long run, poker is close to 70-30 in terms of skill to luck. So, I'm not going back to see if I can get lucky." Which is interesting because that is a similar attitude that a professional trader would have towards trading the stock markets.

Trading stocks for a living is no different to a professional gambler living it large in Las Vegas. The only difference is the environment; market traders seem a little more "white collar" since they are mostly watching their stock charts and watchlists in front of a computer. They watch the financial news and seem more "business-like". Whereas gamblers, stereotypically are surrounded by cigarette smoke, in a leisure-like environment.

Ok, am I missing a mark here? Nowhere in that article was gambling mentioned... So is poker gambling? Ha! It's a circular argument now... People who have systems in playing poker can easily beat the game and win back a certain percentage of earnings. This was proven by the team of student engineers from MIT in the past decade, where the team won millions of dollars for themselves by simply having an organised system to beat the casinos. The way these professional poker players are exactly how share traders do business.

So now what? Why do I care is share trading is gambling or not? The word gambling simply has baggage. To me, gambling = bad. I don't know who taught me that or where I picked it up. Maybe it's how some people see credit cards = bad. I know why credit cards would be bad for some people - it would mean a huge dent in their finances as they don't have the financial discipline to pay back their debts. That's why credit cards = bad. For them. How about gambling. Why is gambling bad? Is it simply the way I was taught because other people lost large amounts gambling? Is that the only reason why gambling = bad? Or is it because it doesn't contribute anything real to anyone except ourselves? Hmmm...