Thursday, December 18, 2008

Stock Market Gamble


Disclaimer: I am not a gambler nor do I intend to be. That said...

Five years ago I started buying shares of stock in the company where I worked. It was easy, the company I worked for deducted the allotted amount from my paycheck and bought the stock for me. At the time I was buying one share for anywhere from $40-$50. I quit working for that company nearly a year later and held on to the stock in a separate brokerage account.

In August 2007 I had to sell that stock because Joe and I are poor. I sold the stock at $105 per share. A really good return if you ask me.

Today the company that I used to work for has been absorbed by another company and stockholders were given approximately .94 shares of the new company stock for each 1 share of the old company stock, which makes the original stock (which I fortunately don't own) worth approximately $14.50 a share now.

With all the news of stock market woes, I'm having a hard time differentiating between gambling with dice, for example, and gambling in the stock market.

Why is it considered smart and reasonable to put all of your money in a market that may or may not give you decent returns but a sin to put your money down on cards?

Is it in the definition? I've been reading a bit online and a USA Today Columnist suggests that the definition is the key: that gambling is a game meant for entertainment. But, it's possible that people go to Vegas seeking a return on their "investment"? In fact they go in droves hoping to return home with more money.

Ultimately, the action remains the same. Risking money on a hunch or potential luck of the investor; knowing when to get in and knowing when to get out.

Everything that I have read explaining the sinful nature of gambling can also be easily attributed to investing in the stock market. Help me. What's the difference?

5 comments:

leigh said...

i think the difference is in how you "play". if you play the stock market buying and selling and trying to get make money fast, you'll probably lose or break even, but you probably won't win much. but if you put it in and leave it there for, say, 30 years, it will go up and down but slowly up in the long run. besides, you're investing in companies that run that way, with help from the public. it's not the same as giving money to a bunch of wealthy mob bosses (well, not in most cases anyway). ask taylor parkin about it.

Doughy said...

Gambling is a head to head competition of two or more parties. People gamble with the intention to make money without having to work for it. The consequence of that is the loser walks away completely broken. I believe the sin lies in the fact that one is looking to skip out on the fundamental concept of having to work to earn something. Gen 3: 19 - "In the sweat of thy face shalt thou eat bread.."

Compare that to investment. Instead of a competition, you're actually looking to help someone out by providing them a resource. It's a team game at that point. If they are successful, you are successful. If they lose, you lose. You're not looking to get away with someone else's money at their expense, you're looking to form a cooperation in which both parties can benefit.

Just like anything, even good things can be twisted into evil purposes. I'm sure you can think of instances where investment seems more like gambling than providing resource. Take our current stock market situation. Many lenders got so greedy they were looking to lend to anyone at any time. They weren't looking to for a partnership, they were looking to break peoples backs with interest. Their greed got in the way of the trust required for an investment to be a win-win situation.

j said...

when you buy stock you actually are buying a portion of the company, and technically have a say (maybe a small say) in how things are run at the company.

Tabitha said...

There is no difference.. The world is going to hell in a hand basket... So gamble or invest away... You will get the same outcome!

DN said...

I completely agree Heidi. Whats the difference? Here's what I say...At least in Vegas you can sit and look at pretty lights and if you sit at a machine playing the penny slots long enough then the girlies come by and give you drinks. I have never heard of that with stocks...