Gambling in the financial markets

by Finploris
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Along the gambling spectrum, I would place our lives on one side, while betting on whether a coin will flip on heads or tails on the other. 

Quite everything in our lives is a bet. The only distinction is the degree to which we can predict the outcome and the consequences associated with it.

You must be a risk taker. Seriously.

Every day we make decisions that determine whether we will live or die. Even when crossing the street, we have to estimate whether or not we will be hit by a car. Simply put, we bet on whether or not we will make it safely to the other side of the road.

Sure, this is a huge oversimplification of the bets we make in our daily lives, but what I’m saying is that there is a full spectrum of gambles that we make all the time. 

Even though we may not consider a simple thing like the food we choose to eat, even that decision has an outcome where we should consciously think about the outcome. What kind of risk am I taking when I eat that huge, delicious hamburger? 

The financial markets are by far the largest betting arena in the world.

Almost all investors, whether professionals or individual investors, attempt to justify the stock market as a kind of platform where you can buy shares in a company. Certainly, that’s the truth. Investing in public shares allows you to own a small stake in a company that you believe has a great future.

Unless you are a very large investor who can influence the market or have a major impact on the future performance of a particular company, in essence, you are just a follower. You would have to invest millions, if not billions, of dollars in a single company to have any real impact on that company’s future performance.

It is about the awareness of risks.

In other words, almost every investor in the stock market is making a calculated bet on whether a company will succeed in the future. It’s simply a slow-motion version of a horse race, where you bet your money on who you think will cross the finish line first.

I’ve been hearing all kinds of discussions about how investors try to make calculated decisions based on the past performance of the companies they invest in. They analyze the leverage ratio, the earnings numbers, the management track record, and all sorts of key metrics to make an informed investment decision.

No matter how many different data sets you look at, though, at some point you have to make a decision and place a bet. 

An investor has to invest his money where he thinks he will get the best return. It’s no surprise that venture capitalists are known to be excellent poker players. 

There’s a reason successful investors also like to own racehorses. Those who are very successful like to make calculated bets that they expect will pay off in a big way. And the most successful gamblers are often the richest as well.

The reason why you should start your own business.

The past few days have made it clear how little control the vast majority of investors have on the financial markets. Just look at the sharp fluctuations in the price of natural gas.

According to Goldman Sachs Group Inc, the unprecedented rally that sent U.S. natural gas futures soaring as much as 72% was likely due to tight liquidity rather than supply and demand considerations.

It’s simply that traders are making daily bets and trying to price in the long-term impact of the ever-changing news flow. However, you should invest in financial markets. And of course you can earn a lot of money there.

But what I am saying is that if you are serious about investing, you should also look for other opportunities where you have much more control.

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