Forum Archive Index - March 2004

["tennyson@caverock.net.nz" <tennyson@caverock.net.nz>]

Hi Jim,

 
> Snoopy wrote:
> 
>>look at the size of the pie you are investing in.
>>    If it is decreasing you are gambling.  If it 
>>remains the same size you are speculating.  
>> If the pie is growing you are investing.
> 
>That reads to me like:  If I am losing I am gambling,
>but if I am winning then I will call it 'investing'.
>

No, that isn't what it says at all.

Long term the laws of probability take over.   If your return comes from 
a diminished prize pot that has been robbed by the state/casino owner 
then loss is inevitable if you play long enough.  Of course in the case 
of Lotto 'long enough' might be a few thousand years.    Since Lotto 
winners don't live that long, the long term laws of probability are of no 
interest to them.    You certainly *can* come out ahead by gambling, 
for a while, a fact that any Lotto winner will attest to.    For many that 
big win possibility is sufficient to knock over the consequence of the 
statistical inevitability that they will lose eventually if they keep playing.  
The long term inevitability of the laws of probability say *nothing* about 
what will happen in the short term though.

If you are 'losing' does that say anything about whether you are a 
gambler, investor or speculator?    No it doesn't, as 'short term' 
gamblers speculators and investors all win and lose.


> 
>Also,with gambling the 'pot' doesn't necessarily get smaller,as in
>gambling between friends. 
>

True.  That is why I would call a game of poker between friends 
speculating and not gambling.

> 
>>>From what you have said, traders are gamblers.
>>How come you have avoided  Woody's wrath?
>

No, read my definition again.    I would class share traders as 
speculators.     And there is absolutely nothing wrong with that.

SNOOPY

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