Online Stock Trading

I want to clarify a distinction. Hoping a stock will go up is speculation. Knowing a stock will go up is smart investing. Speculation is gambling. When I read other blogs and articles I often read about the sensation felt while stock trading—something like, “that felt good, almost like gambling.” That sensation is our encounter with luck. Or even better, it’s our encounter with the hope that it will fall on our side. If feeling lucky feels so good, why doesn’t prudence? Think about that.

Why does knowing you’re going to win before you even play ruin all of the fun? Deliberateness is actually a form of work. Being lucky is a windfall. It exacts essentially no price. It’s one of life’s freebies. But ask anyone and they’re likely to tell you (correctly) that life offers far fewer freebies than it does misfortunes. This tug of war is so stamped on us all that when we’re feeling lucky, what we’re really feeling is that we stole back something stolen. Keep that in mind.

Another thing to keep in mind is this. Gambling can offer a payback grossly exceeding the investment. In a winning round, what we get from the pot is never just what we put in. That somehow makes it so that the slow trickle of losses compensates for the possibly much larger win. When gambling and, as I am suggesting, speculating or hoping, realize that gambling is always a losing game. This remark might draw ire. Many people believe that stock investing is not comparable to probability games—that people can, after all, beat the house consistently. In that sense I can agree but only because there is no house to beat. There are only other people. Your loss is another player’s gain. Every trade then, is a gain.

If certain players then seem to consistently be winning over a very long time, I can assure you that those players aren’t the ones with butterflies. They passed the point of feeling lucky long ago. They are the ones relying on their boring prudence. Instead of auctioning off their dollar bill crossed fingers and all, they are the ones who, when offered a dollar for eighty cents, said, “Sold” then walked away.

Considering how much in the minority investors like this actually are, that must be telling as to how many gamblers there are. That might even make the few of us feel lucky.