I am posting a few links for us to understand what kind of market we are in. The first link below is to Jeremy Grantham calling out the big stock market bubble we are in:
The second link is to a rookie trader who committed suicide over a perceived negative balance in his Robinhood account
The third link is about sports betting moving to stock market due to COVID.
https://www.nytimes.com/2020/06/14/business/sports-gamblers-stocks-virus.html
So the financial markets are this in a nutshell….
Big Bubble + Gambling + Novice Investors/ Gamblers
My personal opinion is that yes, investing in the market is a bit like gambling. You are betting on some companies or some sectors to do well. It is supposed to be better than gambling though; because the expectation is that the bets you make are more “informed”. Informed of the fundamentals, technicals…. and therefore you move the mathematical probabilities higher of emerging on the winning side.
Just as in Vegas; the vast majority loses; and the minority that wins does so because they take the effort (illegal or not) of moving the mathematical probabilities in their favor!!
In order to win consistently in gambling, you need to take the emotion out; and be ruthless in how you place your bets and know when to step away from the table.
It is the same in stock markets; not being able to take emotions out from investment decisions is probably the single biggest reason for people to lose money in the market. It is difficult to do; I failed at it…multiple times.
Making money in stocks is easy; having the emotional discipline to do so consistently is the tough part. I realized I was not good at it and hence moved to algorithmic trading.
Believe me, the temptation to intervene is high….writing this blog today is for me to reinforce my own rules to myself!!
