Investing vs Gambling how to identify ideal investments

Investing vs. Gambling

Do you have an idea on how to identify ideal investments? I just got back from Las Vegas, and it inspired me to dig into why gambling and investing are so completely different. I’m not much of a gambler, but on occasion I will blow some fun money at the roulette table, or on slots. Games of pure chance where the odds are intrinsically rigged against you.

Investing vs Gambling how to identify ideal investmentsThat’s really the main difference. Investors choose to play games where the odds are RIGGED IN THEIR FAVOR. Would you say that the Casino is gambling against you? Nope. They have invested in systems that attract gamblers which predictably lose over the long haul. Investors want to be the casino, and not the gambler. That much is simple. But how do they actually determine whether the odds truly are in their favor?
Criteria for identifying an investment….

Criteria for identifying an investment….

• Intrinsic Value- investments tend to have some sort of intrinsic value. They can have tangible value like Gold. They can have functional value like Real Estate or Business. They can have risk value like an insurance policy or an option. And with all of these people have place value in them. In contrast, a spin on slots has no intrinsic value. It’s simply a bet which could go in your favor, or more likely than not, it can go against you.

• Track Record- investing tends to be more intelligent when it takes the track record of an asset into consideration. When Warren Buffet invests in stocks, he looks for strong financial track records in the company. When a real estate investor looks to buy a rental property, they look for stable or growing housing demands in that area. In contrast, a penny stock trader will speculate and make predictions based on what might be.

• Selling at a Bargain- You can’t gamble at a discount. The games are designed to have risk outweigh the reward. If you bet less, you win less. But in investing, buying an asset cheaper than its value has a tendency to both lower risk and increase profit. It makes sense. If something is selling for $50.00 and you buy if for $40.00, you’re likely to make $10.00 and risk losing $40.00. If you buy the same asset at $20.00, you reduce your risk to $20.00, and increase profit potential to $30.00.

The bottom line is that gambling is at best a zero sum game. You have zero control over the terms on which you bet. Investing is about only playing when all the variables are drastically in your favor. For more information on how to identify ideal investments, click here.

About The Author


I am a college drop out who found my passion as an investor. I love the many facets of finance, investing, and business. But even more than that, I love sharing what I learn with others.

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