From a literal perspective, investing and gambling have the near same definition; yet one is oft deemed a social ill while the other isn’t.
There are estimated 450,000-plus problem gamblers in the UK out of an industry worth £6 billion and employing 100,000 people.
Investing meanwhile is generally viewed as a smart and prudent way to financially plan for the future, yet if you place the definitions of both the words invest and gamble side by side – they are essentially interchangeable.
Invest: To commit (money or capital) in order to gain a financial return.
Gamble: An enterprise was undertaken or attempted with a risk of loss and a chance of profit or success.
Both involve an element of risk and both (increasingly in the investment world it seems as more and more information drives investment prices) are influenced by unanticipated factors.
However, the accepted wisdom is that gambling is a game of chance while investing takes into account so-called fundamentals. But with the growing sophistication of instruments and data tools available in the gambling arena and the dearth of esoteric and derivative products proliferating in the investment sector, these two worlds are blurring.
Take for example the concept of spread betting, whereby investors/gamblers can wager on the movement or spread of shares or markets on the one hand and sporting events on the other.
In addition to the huge amount of marketing and advertising from bookmakers, online gaming websites, lotteries and scratch cards; financial spread betting groups and the seeming explosion of currency trading platforms are also getting in on the act and aiming to appeal to those either wanting an innocent flutter or something more serious.
One group that has been splashing the cash is spread better IG Markets with a series of big newspaper glossy ads and a large visual at London’s Waterloo Station and replacing a campaign by Aviva.
Buying in and out of markets always carries risk, especially when market volatility is high – but how can one distinguish between opportunistic ‘buying on the bounce’ and informed cool-headed investment?
Isn’t this what we’re taught in Investing 101 – ‘do not try to time the market!’
However, arguably the world’s most eminent investor, the so-called Sage of Omaha, Warren Buffett, has demonstrated this on two separate occasions over the past six months.
In August 2011 he came to the rescue of Bank of America after sentiment swung against it by investing $5 billion.
This was followed in early January on the other side of the pond in the UK when Buffet upped his stake from 3.2% to 5.1% in mega-supermarket chain Tesco.
The move saw him swoop to buy £500 million of Tesco shares after it reported weak Christmas sales and the markets gave its share price a thorough kick in the shins.
OK, granted, this is hardly spread betting but it could cynically be viewed as a punt but just a gamble with a longer time horizon.
There is no certainty in any investment, AAA sovereign status is no longer guaranteed, interest bearing fixed income and cash accounts have (albeit an outside chance) of disappearing in the event of an economic meltdown and a run on the banks.
Even the guarantees offered by the UK Government on basic bank accounts (where the state will underwrite approximately £80,000 in savings in the event of a bank collapse) are not cast in stone given the British Government (still AAA status) is not completely immune if there were to be another catastrophic financial crisis.
It’s almost enough to make you want to stop into your local bookie! займы без отказа займ через контактчто будет если не платить займнародная казна займ