October 14, 2020 (Investorideas.com Newswire) Many people compare investing and gambling to one another, and while they are in reality quite different, they do share some similarities at their core. For example, both investing and gambling involve risking capital with the intention of turning a profit.
What is the difference between an investor and a gambler?
Neither investors or gamblers can guarantee that they will make significant returns. However for investors, the stock market does appreciate over time, so why they may not see a positive return at one point in time, the odds are in their favour in the long term. Whereas for gamblers, the 'house' (such as a casino) has a mathematical advantage over the individual. The longer they play, the more the odds favour the house. Nevertheless, gamblers can still turn a profit if they are lucky enough to hit a jackpot. An investor usually has ownership in something such as a stock, whereas a gambler does not.
How do gamblers make their decisions?
Experienced gamblers practice risk management, they will use as much information as they can gather before placing a bet or wager.
For instance, if they're betting on a football match they may search for the NFL odds and will consider the team's history as well as any current players injuries and form before placing a bet. Odds can change each week depending on a whole range of factors, including off-field incidents, meaning it is important to stay up to date.
For horse racing, a serious bettor may do research into the horse's bloodline and make their decision based on the previous success of that horse and its ancestors.
Casino gambling works a little differently, if playing a card game such as poker, the player will look for cues (or 'tells') from their opponent. This information alongside the opponents betting history helps a gambler to decide when and where to place their bets.
Usually, the odds are against an individual when gambling. They are more likely to lose money to the house than to gain significant returns. However, a big part of playing is for the entertainment and fun involved, which is of course subjective and cannot be measured in any monetary terms.
How do investors decide where to invest?
Both investors and gamblers hope to minimise the amount of risk they must take in order to receive a financial reward. However, investors have more ways of mitigating loss than gamblers do.
An investor will allocate some of their capital to an asset, such as a property or stocks and shares. They hope to gain income from this or that the asset will appreciate in value and they will be able to sell it for more than they paid for it originally.
Investors can often choose what level of risk they want to take, the higher the risk the higher the potential reward (or loss).
Many investors try to minimise the potential for losses by managing a diverse investment portfolio. This means spreading their investments across different types of assets.
Investors as sports betters
So does this mean that investors make good sports betters? Well, professional investors are capable of analyzing data and information. Therefore, researching player statistics and keeping up-to-date with the news should come naturally.
Of course, betting on sport isn't all about the money. It is a form of entertainment and a part of sports culture. Betting on a team you support adds thrill and suspense to the game. For investors, having a passion for the sport will help them to get involved and enjoy the process.
While an investor's natural inclination for information gathering will prove extremely useful in sports betting. Taking part in casino table games like poker is a whole different ball game. To succeed in this, they must study the rules of the game and develop skills in being able to read their opponents deception and predicting their opponents next move. In this instance, gambling successfully involves more than understanding mathematical probabilities.
So, investors can make good sport bettors providing that they understand the differences between investing and gambling. Having a passion for watching sports will also surely help in making the gathering of information before placing a bet an enjoyable and rewarding experience.
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