Are Stocks Including Gambling? Let’s Find Out
“Is the stock market including gambling?” maybe is a question that often comes to the minds of people. The reason is, the opportunity to get profit in stock investment is done with guesswork. Stock market is full of challenges and carries a high risk, Investors are required to choose stocks that are profitable at the right time to make a profit. Then, the price fluctuations that occur will determine whether your choice is right on target. The problem of choosing stocks is what people often assume is a guesswork. Because guesswork, automatically the profits you get are also chancy, like playing money games, is it really like that?
This includes those who say that investing in stocks is act of betting. The claim is of course unsettling as well as making people who intend to invest in stocks doubtful. It is certainly a strong reason not to invest in stocks. This assumption is actually the result of the lack of public investment literacy. If we properly understand the mechanism of the stock market and how we can benefit from it, it is clear that stocks are not just a matter of lucky guesses.
Of course there are a number of reasons behind the notion that activities related to stocks are “money games”. Though not always the case, gambling itself is concerned with making decisions based on speculation and wanting instant profits. Of course this is different from the investment that can be planned and it takes time to get a profit. The following are the reasons for the assumed stock including gambling to appear:
There is no physical exchange of goods when buying and selling shares. Currently, all trading systems on the Stock Exchange are conducted electronically. Transactions are carried out without non-cash payments and transfer of securities or funds, only through the debit-credit mechanism in the securities account. Proof of securities ownership is manifested in a securities account. So, physical goods do not exist and everything is recorded in detail in the account.
Buying and selling shares is like betting, this assumption may arise because some people are buying and selling shares that are similar to betting. For example, a person chooses stock in a particular company and then only hopes that the price will go up to sell it again. In fact, there are a number of methods and plans for selecting the right stocks and optimizing profits. That’s why there are a number of strategies that can be done, including technical fundamental analysis and technical analysis used in stocks.
Investing in stocks itself does have an element of choice and risk, and we are required to choose and take the risk ourselves. There are risk management methods that can be applied in investing in stocks. Investors are usually advised to diversify their capital in different stocks, for example, at least 10 companies. Thus, the risk of loss will be spread out.
The three points above should be able to clarify the statement about “Is the stock market the same as betting?”. However, there are still some who do it simply by gambling. As long as you choose stocks while hoping that luck will come. Because it is similar to gambling, usually people who buy and sell shares in this way will lose money. In addition, those who lose money are usually those who ‘try’ without sufficient knowledge. This is certainly different from stock activities which are accompanied by exact analysis, adequate information, and actions to minimize losses.