Investing in Stocks vs Education

[smartDad]

Stocks may give you more return money wise but you can use education in your every day life. They say money can never buy class.

[Scipio]

Originally Posted by The Big D

That statement seems inconsistent with your past posts, but I don't see any point in pursuing it since the only way to prove what I'm saying would be to drag you somewhere where professional gamblers can be found, and ask them if they're gambling.

And that still wouldn't prove anything because I would tell them they're mislabeling the activity, as I just said in the post you are quoting.

[Scipio]

Originally Posted by ar81

Certainly if you invest in a company you know, that's fine, because you know for certain what happens to the company. But if you invest in stock market, you are not certain. Balances can be altered. Do you remember Enron? Would you bet your future on such gambling?

One can invest in companies they know on the stock market. In fact, I think that's one of the keys to investing--investing in a company and market you have expertise in.

[Scipio]

Originally Posted by The Big D

Even when there is no foul play a la Enron, investing is gambling. When you buy a stock, you're wagering it will go up. This is not a forgone conclusion. Therefore you are gambling.

Every possible action a human takes is a "gamble" according to your insane definition, because everything you do has an expected outcome and a real outcome that could waver from the expected outcome. Something not being a "forgone conclusion" does not make it a gamble. Gambling is partaking in games of chance with no ability to improve one's odds.

[The Big D]

Originally Posted by Scipio

Every possible action a human takes is a "gamble" according to your insane definition,

My definition is not insane, it's the meaning of the word in standard English as taken from a respectable outside source. If you want a different meaning, use a different word. And no, most human actions do not meet the requirement for definition 1 since there is no money, game, or bet.

I would agree that definition 2 (more of a "philosophical" gamble) is a bit vague.

[Brutha]

One can invest in companies they know on the stock market. In fact, I think that's one of the keys to investing--investing in a company and market you have expertise in.

Absolute expertise is irrelevant. The thing that counts is to have more expertise than those guys at Goldman with have millions worth of computer programs and a lot of very smart people around.

If you are better than them you make money and they lose money. If they are better it's on average the other way around.
Of course there still some natural amount of money that's gained through the average market movement.

[The Big D]

Originally Posted by Brutha

Absolute expertise is irrelevant. The thing that counts is to have more expertise than those guys at Goldman with have millions worth of computer programs and a lot of very smart people around.

I agree that it's all relative, but the guys at Goldman aren't 100% sharp. If they were, they'd be trading their own private accounts first and foremost rather than Goldman or managed money. Most of them either can't trade (bad) or can't hold onto money (which can work out OK but means you always need a stake).

[Brutha]

I agree that it's all relative, but the guys at Goldman aren't 100% sharp. If they were, they'd be trading their own private accounts first and foremost rather than Goldman or managed money.

Taking risks with other peoples money instead of taking them with your own money doesn't really mean that you are stupid.
Heads I win, tails you lose is a popular strategy.

If you are smarter than the average Goldman bankers all the more power to you.

[Tristan Bull]

They both require education.

The key is to have the RIGHT education.

If someone became well educated in investing in stocks then it wouldn't really be a gamble because they knew what they were doing.

Here is a fun fact for ya:

Most A and B students work for the companies that are owned by C students.



Tristan

[pjhaggerty]

Originally Posted by Brutha

Absolute expertise is irrelevant. The thing that counts is to have more expertise than those guys at Goldman with have millions worth of computer programs and a lot of very smart people around.

If you are better than them you make money and they lose money. If they are better it's on average the other way around.
Of course there still some natural amount of money that's gained through the average market movement.

It's not even comparable. Goldman Sachs, large mutual funds, pensions, and other institutions aren't playing the same game as retail traders. Their goal is to keep their clients money with them and charge the management fees. They can do that without even being profitable, as long as the clients are happy. Market makers are attempting to pocket the bid ask spread, not capture directional trades. Retail traders are attempting to grow their account equity.

Different goals means that while there might be competition on some levels, they don't have to lose for you to win.

[thegute]

I have been in the markets for over 40 years and there are many ways to make(and lose) money but they boil down to two basic mid-sets - an investor or a trader. You can become a billionaire (or lose billions) doing either.

An investor is a person who will looks for companies and 'buy' it with no intentions of selling it. Warren Buffet is a perfect example. He will only buy stock in a company that he believes will be successfully over a long period on time.

A trader is a person who is looking to make money on the market. He will buy/sell under or over valued stock/commodities/currencies and quickly buy/sell them at a profit. The holding time can be seconds, minutes, hours, days or months. A perfect example is James Simons. He is a math PhD who over the past 20 years has traded using software he and his team developed in many markets putting him 55th on the Forbes richest list for 2009.

Both have very intelligent systems of how to take action in the markets. They do use OPM(other peoples money) - Buffet from investors and insurance premiums and Simons from hedge fund investors.

If you are interest in making money in the markets study whichever style suits you. Think of it the same way a an entrepreneur starting a business.

I would not invest in indexed funds unless finances hold know interest to you. The choice you are making is to let others control how your savings is to be protected and grow. It is similar to choosing a school for you child - once you send them off you are putting your faith in that school that they will be safe and taught well or do you want to home school them.

Hope this helps

Michael

'In an infinite universe anything is possible'