The myth of stock investing – it’s not gambling
I know a lot of people who are afraid to put their money into stocks. They’ve seen the ugly side of stock investing. Good for them I must say because to be fearful (and careful) is better than plunging into something you don’t know – especially when it comes to stock investing. Why? Because stock investing can involve a lot of money. And surely, you wouldn’t want to throw your hard-earned money as if you’re throwing them into a rubbish bin.
However, I do realize that sometimes people are becoming too fearful of something they don’t know. Just the other day, a friend of mine told me he’s going to venture into land investing. I asked why don’t he consider stock instead because the entry cost is lower. You don’t need so much money to go into stock investing and you definitely don’t need to get a bank loan for it. His reply was simple – “I don’t like to gamble”.
I think most people have the thinking that stock investing = gambling. Unfortunately, it’s not if you know what you’re doing and if you’re not trying to get rich quick. Based on The Free Dictionary, gambling is “the act of playing for stakes in the hope of winning”. This definition is somewhat similar to the definition of speculation: “Engagement in risky business transactions on the chance of quick or considerable profit.” And I often put these 2 together due to their similarities.
But to say stock investing IS NOT gambling, is kind of an understatement. Because there are a lot of stock investors who do speculate and gamble. These are normally the short-term stock owners. They tend not to keep a particular stock for more than few months. They do short-term buying and selling, and they trade a lot. However, when asked why are they investing in a particular company, most of them will not be able to answer you. Investing with uncertain future is, in a way, speculation. And as long as it’s speculation, it can be considered as gambling.
But this does not apply to stock investing alone. It also applies to other form of investing, be it land, property or stock investing. Truth to be told, this kind of method does help you earn a lot if you’re lucky but it is also very very high risk. I’ve burnt myself in the past due to stock speculation and it wasn’t a pleasant feeling. So easy come, and easy go. Just like how you can go buy lottery and if you’re exceptionally lucky, you will win a large sum of money.
However, if given a choice, I would encourage people not to speculate in stocks and never do all those short-term trading. It is too risky. If you want to invest in stocks, be prepared to spend an awful amount of time understanding the way it works, how the companies operate, the track records of the company’s management team, the prospects, etc. There are tonnes and tonnes of stuff for you to do research on. From there, you can shortlist some of the companies that you’re interested in and wait for them to drop to a price which you think is cheaper than the fair value. Then go in for those undervalued stocks. Invest and keep. But be prepared to keep them for 3-5 years (or even longer than that!). Yes, stock investing is about holding on to a particular stock for long term. If you’re trying to sell within few months, then it’s not really investing. It’s speculating.
So there you go, the myth of stock investing. As you can see, the proper way of stock investing is very different from what most people believe it should be. It’s not gambling at all. There are some uncertainties, but you make the decision based on your research and studies, not based on some unfounded rumors. And by far, it is also the best investing for me. Low entry cost, decent profit.
Just make sure you know what you’re investing in. 
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