Gambling and Investment
More acceptably, gambling is a high-risk recreational activity. Over the years, a great number of gamblers devote much passion to it, but few people can get benefits from the games. Thus, such a special speculation is hardly linked to investment, because gambling has always been considered as a high risk behavior without rational management of investment funds. More people are used to reckon gambling as a special personal activity, and that there is no direct correlation with social and economic.
In fact, this is a great misunderstanding on the gambling behavior from long-term perspective. Gambling to some extent, have great similarities with the shares, securities, futures, etc.. The different is that the former benefits and personal control in the relationship is far greater than the latter, and the latter has more to do with political, economic military and the business environment. If leaving these factors aside and thinking the changes in gambling chips as the curve changes in the stock or futures, it is not too hard to find their similarities. There are rises and falls in the curve over a certain time and it is this curve volatility that offers investors the opportunity to make profits. Generally, the cycle of stock and futures volatility is longer, so you can choose fewer opportunities to benefit. However, gambling is different, since you can have a choice within a day or even a few hours.
Further, both gambling and investment are decision-making process as well as risk management processes, and gamblers, like investment guru, is an outstanding risk managers. In general, gambling is to understand the variety of gambling games, all kinds of information such as commission rate, expected value, odds, allowed betting amount, standard deviation, difference, etc. after which a decision relating to whether bet or not and how to bet, is generated. The whole process concentrates on methods and subjects. The investment is also a similar decision-making process. For instant, when investing in real estate, we must first understand the information about market, demand, policies, equity capital, loan capital, and through these objective, subjective and personal information to create a proper decision. Admittedly, there always exits risk when carrying out a decision-making behavior. Therefore, gambling and investment also require participants to have a strong sense of risk assessment and risk control. As risk can be reflected in the incomplete information, and inconsistency in decision-makers, which is entirely a risk management process that would depend on the overall quality and decision-making capacity of decision-makers, gamblers and investors can be regarded as risk managers.
Since there are so many similarities between gambling and investment, why most gamblers failed to make money but more stock investors can obtain more expected profits? Main reason is that gambling is an investment activity that is time-compressed, and extremely difficult to control mood. The casinos will not only take advantage of favorable rules, and more important factor is that they make use of human psychological flourishes. Gamblers usually don’t have long-term goals and strategies and lack of awareness and means to spread risk. More, they look too arbitrary in action with fluke mind. Conversely, the successful stock investors pursue their own goals at various stages and build an awareness of risk diversification. In addition, the gamblers lack plan for invested funds and expected benefits. They always think that the money can expand when winning and they fail to stop when losing and hope to get the money back in the following few hands which eventually leads to the drain. Nevertheless, the successful stock investors usually will effectively analyze the stock market, followed by a corresponding gain to set goals, with pre-developed oscillator range in short-term investment. They will not put all the money into one basket to diversify investment risk.
Simply speaking, investment is to put fund into a field with unknown yield. Whether gambling, stocks, lottery or any other activities with money invested, can be thought of a type of investment. In these investment activities, there would always be losers without any prepared study and research, because these investment operations require us to do a comprehensive analysis of the situation, and to judge the expected value of this investment is positive or negative. Therefore, if you want to benefit from gambling, you must conduct gambling as an investment, with the need to do extensive research to gather information (to understand win rate and the expected value of the games), to learn techniques (blackjack card counting), and also to find out the best entry point (positive expected value), so that you can ensure long-term profitability. Therefore, with research, even gambling, as long as you find the chance to beat the casinos, can be treated as an investment to make you a long term winner and let your wealth grow continuously.
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