Investment with knowledge is not gambling!

Investing in stock market is not gambling. Both the terms are sort of just arbitrary milestones on the continuum of risk. It is the level of risk that differentiates them. A defender of investing will tell you with the experience he has that the risk in investing is pretty much managed where as the one associated with gambling is matter of a pure chance. If you pick up a random stock and hope it goes up (or down in a short sale), you are pretty much playing a roulette then because this is pure gambling. It becomes an investment when you have enough knowledge about the stock to make an educated guess that you will not lose your money. Gambling and stock market investing both involve risk-taking, but this does not equate the two. Taking risk is inherent to diligent and productive work. Gambling is consumption — it is done for the entertainment value of taking a risk. Stock market investing contributes to production — it is the taking on of risk as part of providing a valuable service. Because gambling is consumption, a gambler can expect to lose money, on average. An investor in the stock market can expect a considerable return, on average. Gambling, reduced to its essence, is the exchange of a rupee for an expected return of somewhat less than a rupee, sometimes accompanied by blinking lights and spinning wheels. Now, we cannot say that gambling is wrong because it is entertaining, nor can we say that it is wrong because it is risky. We cannot even say that it is wrong because the gambler is likely to wind up poorer, for there are plenty of legitimate activities that cost money. A gambler is engaged in morally questionable activity because he is deriving entertainment from that which ought to have no entertainment value, like one who laughs at a car accident. A gambler takes that which is certain — a bird in the hand — and exchanges it for that which is uncertain — a less than 50-50 chance at the two in the bush. Gambling is entertainment for people who enjoy risk and uncertainty for their own sake. People who believe stock market is a gambling apparently misunderstand the source of fluctuations in the stock prices. What seems like random movements or the product of mass psychology actually has a rational economic explanation. So, basically for a person who understands the business cycles and the strategies dealing with the stock market has the potential to earn long term returns. Investment is merely to put the money to use by purchase or expenditure, in something offering profitable returns. It is to commit money or capital to gain financial returns. It involves the ownership of something tangible and a net positive economic effect results. Diversification is a benefit associated with investing. In a nutshell, by investing in a range of assets, you reduce the risk on one investment's performance severely hurting the return of your overall investment. It aims to maximize return by investing in different areas that would each react differently to the same event. Although it does not guarantee against loss, it still is one of the most important component of reaching long range financial goals by minimizing risk. Stock Market Returns are generated out of the stock market by the investors. This return could be in the form of profit through trading or in the form of dividends given by the company to its shareholders from time-to-time. These returns are not fixed ensured returns and are subject to market risks. They are not homogeneous and may change from investor-to-investor depending on the amount of risk one is prepared to take and the quality of his Stock Market Analysis. In opposition to the fixed returns generated by the bonds, the stock market returns are variable in nature. The idea behind stock return is to buy cheap and sell dear. Therefore, all I would like to state is investing is completely different from gambling. It is the rumors and the psychology of people which merges the both and the above points completely states the difference. Investing without knowledge is a pure gambling but an investment done with prior knowledge and research is not more liable to called a gamble because then it is an educated evaluation.