02.08.11

Similarities Between Playing Craps And Investing

Do you know the difference between playing craps and investing in the stock marketplace? In my opinion, completely nothing! There’s extremely small difference between playing craps and investing in the stock marketplace. Some stocks possess a higher threat factor having a chance and expectation of a higher return, although other stocks possess a decrease threat factor, but additionally with an expectation of a decrease return. Similarly, some craps bets possess a greater threat factor having a higher win pay-off although other craps bets possess a decrease threat factor having a decrease fee for that win pay-off.

There are tons of similarities between various kinds of stock investments and playing craps. For instance, investing in stock options is extremely dangerous in comparison with investing in conservative, dividend paying securities, like Disney, Coca Cola or MacDonald’s. Stock options will permit you to make large earnings, but with a fantastic deal of threat. Investing in the conservative businesses may have a decrease threat, but will give you a lot decrease earnings. Needless to say, you can nonetheless shed money investing in conservative businesses.

In craps, you can bet on the 2 or 12 that will give you the highest revenue (pays 30 to 1), however it also has the greatest threat of losing (much less than 3% probability of winning). Or, you can bet around the 6 and 8 which have decrease win payouts, but additionally a decrease threat of losing. As in investing in stocks, a craps player may have a opportunity to shed even on very low threat bets.

Webster’s New World Dictionary, Compact College and Office Version, defines “Invest” as “to place (money) into business, bonds, and so on., in order to obtain a revenue.” Webster’s Dictionary defines “Gamble” as “1. to play video games of opportunity for money, and so on. 2. To get a threat for an advantageous position.” By comparing the definitions of “Invest” to “Gamble,” one can ascertain that if you invest, you are putting money into stocks (business) or bonds or financial institution certificates of deposit in order to make a revenue. If you “Gamble” (play craps), you are putting money (a wager) on the portion with the Craps table layout in order to win money. Depending upon how you invest and the way you bet playing craps determines if you may have a higher opportunity of making money or perhaps a higher opportunity of losing your money.

If you listen to radio financial speak show hosts and their friends and you view financed-based Television applications (CNBC), also as study investment magazines and publications, you will notice comparable philosophies for investing as we recommend in playing craps. A couple of of the comparisons are as follows:

1. “Investing usually involves threat.” – - Don McDonald, nationally syndicated speak show host, 1/24/01. Bob Brinker of Money Speak has also stated something towards the exact same have an impact on.

Translation: Playing craps usually involves threat.

2. An advertisement by American Century in Intelligent Money Magazine, January, 2001, page 58, states in component as follows:

“It’s knowing teamwork along with a disciplined method can supply solid, long-term outcomes.” See also, Money Magazine, December, 2000, page 30.

Translation: Playing craps having a disciplined method can supply solid, lengthy phrase outcomes.

3. TD Ameritrade in their disclosure to investors about options (2008) state in component:

We all know that options could be an essential component of your investing technique. . .

Options aren’t suitable for all investors because the unique dangers inherent to options trading might expose investors to potentially rapid and substantial losses.

Translation: Playing craps isn’t suitable for everyone. Playing craps might expose individuals to potentially rapid and substantial losses.

If you apply investment methods and sound business principles to playing craps, you ought to be able to minimize your losses although maximizing your earnings (wins). Just remember – - as there’s no foolproof technique to investing, there’s no foolproof technique to playing craps.

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