Forum Archive Index - April 2004

["Lazy Haggis" <lazyhaggis@hotmail.com>]

You made the statement. "All the mining juniors you mentioned are pure 
speculation, nothing more. You'd be better off going to the casino."

Which casino and which casino game? The house percentage varies from game to 
game. Some Blackjack card counters can swing the house percentage to their 
advantage, but they are very few and far between. Poker is played in some 
casinos with the house taking a cut from the pool. Some experienced poker 
players frequently win in casinos at the expense of other players at the 
table, but once again, they're very few and far between. There are many 
people who genuinely believe they have found a way to beat the house 
percentage on various casino games (typically roulette) but needless to say, 
the longer they play, the more they lose and the more they are likely to 
lose. Something to do with the law of averages I believe.

As far as stocks and shares go (in simplistic terms) there is investing, 
speculating and gambling.

If you purchase some shares (assuming you have carried out reasonable 
background research) and that asset (shares) returns a regular income 
(dividend yield) then typically such an activity is termed investing. The 
asset may also increase or decrease in value over time as well, depending on 
the timeframe and prevailing market conditions. However, all other things 
being equal, if the asset does not return an income, then such an activity 
is termed speculating.

There are many types of investing such as rental properties, bank deposits 
and dividend yielding stocks. Similarly, examples of speculating would be 
vacant land sections, art collections, and non-dividend yielding stocks. In 
both cases, regardless of whether you use technical or fundamental analysis 
(or both), the speculator is trying to achieve greater growth over time than 
the investor, at the expense of foregoing a regular income stream. 
Speculative stocks are typically more volatile, and carry a greater 
risk/reward ratio than investment stocks.

Gambling on the other hand, often found in casinos, the TAB, and Lotto 
shops, is simply giving up something you have (usually money) in the hope of 
getting something better. Trying to beat the house percentage at a casino 
roulette table or winning at Lotto is gambling, nothing more. The odds are 
against you regardless of how long you play, and eventually over time, the 
law of averages will ensure you come out a loser. Gambling can also be very 
socially destructive. Other than people who have a controlled periodic 
flutter, gambling is typically used  by the less informed and less wealthy 
grasping at straws in the hope of improving their lot in life. Unfortunately 
most lose more, some become addicts, some commit suicide, and many innocent 
people suffer in the aftermath.

The primary difference between investing or speculating compared to 
gambling, is research as opposed to hope. The better your research the 
better your asset return will be over time with investing or speculating. 
However, this is not so for gambling, where your asset return will almost 
certainly diminish over time.

Back to your opening statement. "All the mining juniors you mentioned are 
pure speculation, nothing more. You'd be better off going to the casino."

Some of the mining juniors that I have mentioned are AVO, BRW, GBG, GTM, 
PNA, RNG, and RSN. I accept that these are speculative (non-dividend 
yielding stocks) but I do not accept that any of them are just gambling. If 
you undertake appropriate research (which I assume you must have done) then 
surely you must recognise their potential over time, subject to prevailing 
market conditions?

I ask again, which game and which casino, offers better growth over time 
than these mining juniors, and why?

Lazy Haggis
The Mumbo Jumbo Filter

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