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When does investing become gambling?
(lemmy.world)
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this post was submitted on 17 Jun 2024
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None of the answers I’ve read so far actually answer your question with basic facts.
When you invest then you are buying a tangible financial instrument: a share of a company or a treasury bill or a municipal bond and so on. There is the expectation that over time, the value of your financial instrument will increase in value but this is not guaranteed. The lack of guarantee is the risk. Some instruments are riskier than others. The level of risk does not define gambling.
When you walk into a casino and bet money on roulette, what are you buying? You are buying nothing more than a fleeting chance at winning more money. It is entertainment by thrill. There is no tangible thing that you own from gambling.
Investing is one way that companies can raise capital to expand their business. Business expansion can lead to greater employment and higher standard of living. For investing to work as an economic system there must be liquidity. Someone must be willing to buy your financial instrument later at a higher price or some town must still be collecting taxes to pay back your bond years later.
Hopefully you can see now why investing is encouraged and supported in society and gambling is either illegal or merely tolerated.
Shorting, crypto trading, options are all gambling. Long term investments are usually not.
One is hoping that the price will go a certain way in the short term. The other is giving a company money so they hopefully turn it into more money. that is the difference, nothing to do with casinos.