The stock market can be a casino… if you treat it like one.

A lot of young people feel very strongly about investing, whether good or bad, it usually stems from their family members’ experiences. Let’s say someone had a grandparent who was heavily invested in one company that blew up, this may lead a person to be very risk averse. They may be under the assumption that investing is like entering a casino. Someone else may have a parent who actively traded stocks, so they may feel more comfortable when it comes to putting risk on their money.

It is funny how our upbringings can dictate our thoughts and feelings around money and investing. I have heard a ton of young professionals say something along the lines of, “Yeah, investing is really just gambling in a sense.” I promise that is not the case. Look at the facts… It is a fact that the S&P 500 has never been negative over any 20-year span of time going back to the early 1900s.

Now there are other people, the more “risk-on” folks who believe the stock market is like a casino because they treat it as one. Unfortunately, this behavior does not last long. Usually, because this person runs out of money to gamble very quickly.

The stock market can be a casino if you treat it like one. I promise you, your brokerage platform will not stop you in any way if you wish to gamble… Hell, many of them encourage it. Robinhood is constantly trying to get its users to place a bet by trading a stock or purchasing an option. 

The confetti that fills your screen after you purchase a stock, the red and green candlestick charts, and even the motion of swiping up to confirm an order are oddly derivative, no? I mean come on, that is literally what a casino looks like. Red and green lights, confetti across the slot machine’s screen as you win, swiping or pulling the lever to run your next bet.

It is fairly obvious that these brokerage platforms want people to trade aggressively. They’re encouraging it! And people fall for it all the time. This can leave them with a bad taste in their mouth once they get burned.

When it comes to investing, which is much different than trading, we want to eliminate a lot of the sensations one feels when gambling. Investing is truly a constant process of delayed gratification. We want to feel good about our investments, we want to be confident that even amongst volatility we won’t be provoked into selling.

In gambling, they say the house always wins. That’s true. In investing, you have much more control and I’m not even speaking about choosing the right investments, being tactical, or hedging your portfolio from an impending pullback. I mean that you get to control your actions, you can choose to believe in your investments and leave them be. You don’t need to be actively trading stocks, you need to have self-control and the ability to delay gratification without allowing volatility to interrupt your compounding. 

We should avoid viewing our investments as a gamble at all costs. We’re playing the long game. If you choose to gamble in the stock market, your brokerage platform will love you but many people have only been successful in eroding their capital and creating a mess for themselves this way. Try to separate your emotions from your investments, it will go a long way; which is the game we’re in anyway… The long game.

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