Isnt playing the stock market the SAME as lottery or gambling?

Question

Why or why not? I think its the same because your gambling and anything goes......You can win or lose, like other forms of gambling ..If its not, can you please explain why its not...thanks!

Also, if people say they retire off the stock market what does that mean, they played it well? thanks

Answer 1

It is similar to gambling in that you can win or lose, but it is different in other key factors.

In gambling, everyone who wins get money from those who lose. In the stock market, it is possible for everyone to win. I might buy a stock for $1, sell it to you for $2, you sell it to someone else for $3, who sells it for $4, etc. so we all make money. Remember that owning stock means you own part of a company, so if the company does well everyone can do well. It is not that different from buying and running a hardware store; if the store does well you will keep making money from it but if it does not you can lose money.

Another aspect of gambling that is that there is that gambling involves more risk that you cannot control, also know as luck. While there is always some risk and some luck involved in the stock market, you have much more control over the amount of risk involved. If you learn to read and understand quarterly and annual reports, then actually take the time to read them, you can reduce your risk tremendously.

Finally, you can look at the historical record. Over any prolonged time period most stock investors have made money and most gamblers have lost money.