BobbyD wrote:That's not actually my quote, but the disagreement is! Like I said in my previous post I don't think this is resolvable because of the problems determining the 'true odds' and determining whether an individual is an expected outlier or a genuine out/underperformer, but here is why I disagree.
Firstly whilst I would like to use the mindset of the individual as a basis, it seems entirely natural, the problem is that in large part it becomes a matter of marking your own homework. An unskilled participant doesn't know enough to know whether they are gambling or investing. A bookish approach does not guarantee a more rigorous or logical approach. Somebody who believes seven times black eighth time red isn't investing, they are a gambler who has made an error in logic or calculation. A cardcounter on the otherhand I could accept as an investor. The difference isn't mindset, it is skill.
No, it's mindset. Successful card counters will have determined to what extent the odds are in their favour and will have adopted a strategy to exploit those odds. That is not gambling. They are not chasing returns that are unreasonable and are almost certainly going to have to spend significant time (given the likely small magnitude of favourable odds) making money. That's entirely an investing mindset. The other example (reds/blacks) is a gambling mindset, simply of someone who isn't a very good gambler! Unlike the card counter they cannot have evidence their strategy works and are chasing high returns in a short space of time.
The timespan definition also doesn't work for me. 6 years ago I made a long term bet on the shares of a company (Delphi now APTIV) which was showing some success in the development of Autonomous driving. It's an area where far too little information was publicly available to make a rational decision and any payout was always a minimum of 5-10 years down the line but what they had achieved wasn't nothing, I wanted the exposure and I liked the odds. It was however a total gamble.
If the shares formed only a small part of a diversified portfolio then it's investing. If you dumped all your capital into the share then it's gambling. It sounds to me like you were investing with an investors mindset. the time-scale also supports that.
By contrast when I was sat at a card table, virtual or real, I had an expectation of return, over the long term, which changed depending on the variant being being played, the stakes, the number of players and the location. In effect I had an hourly rate, and what I was investing was my time. It was a job. The paycheque may be advanced or delayed but it always arrived.
I think every decision carries an element of risk, and has potentially good and bad outcomes. Even 'doing nothing' and keeping all your wordly in savings accounts under the £85k FSCS compensation limit leaves you open to the risk that Sterling takes a tumble or goes through the roof, and since your living costs are significantly impacted by its buying power relative to USD this is in my book a gamble. Which is to say in my book everything is a gamble, and investing is a subset of gambling which when you look at it closely most people's definitions revolve primarily around social acceptability rather than any inherent property of the action.
These are just further examples of investment behaviour.
As an aside I'm not sure it's possible (in an empathic way) to really understand the gambling mindset unless you have been afflicted with it. From what I've read, and my own rather sad experiences, I think there may be quite a strong genetic element.
BoE