Trading stocks does require a certain level of technical skill, and of course, gambling also has its technical aspects.
Whether stock trading is considered an investment or gambling depends on each individual's inner positioning. The original intention of the establishment of the stock market was to finance mergers and investments, not gambling.
However, some stock traders treat stock trading as gambling, such as investing all their assets, selling their houses and cars, or using all their savings to trade stocks; some even borrow money to trade stocks, using leverage to amplify their bets. For these people, stock trading is indeed gambling.
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Countless stock traders come to this market with the purpose of making money, whether it is under the guise of investment or a gamble. Other lofty reasons are like the emperor's new clothes.
However, the reality is that most stock traders actually do not make money. Even if they occasionally make a profit, they will lose it back. Yet, stock traders continue to come forward, tirelessly enjoying the process.
The simple ideal of wanting to make money has many ways to achieve it: starting a business, working, etc., and stock trading is also a legal way to make money. The problem is that the stock market has its particularities: it is very easy to amplify human nature! It is like a convex lens, magnifying the greed and fear of the masses! It makes us selectively forget that this is a bloodless battlefield, and the opponents are extremely powerful. We are just a bunch of either strong or delicate leeks, which will hurt after being cut, but the pain memory can only last for three seconds!
I am a worldly stock trader, just wanting to make a little money, and I will never reach the height of the counter-human nature trader like Warren Buffett. However, I still want to wear a more serious piece of clothing, with a style called: investment.
Everything has two sides, and we should view things dialectically and objectively. In fact, stock trading is just like a knife; it is just a tool. Some people will use it for investment, while others use it for gambling, depending on how you use it.1. For Those Who Don't Understand
For those who are ignorant of investment, the stock market is nothing more than a money-eating beast. They impulsively and blindly go all-in without any knowledge, chasing rising prices and selling off at losses daily, and are keen on making short-term profits, which is no different from gambling.
Not considering the fundamentals and only focusing on price differences, they trade back and forth, and most end up losing their principal in the end.
2. For Those Who Understand
For those who understand, they will carefully consider every investment seriously, rather than simply treating it as stock speculation. Although they cannot guarantee profit in every transaction, their success rate is high.
The opportunity in the stock market lies in earning money from the growth of enterprises or the undervaluation of the market. Either by using a solid foundation in economics and finance to analyze the fundamentals of a company and choose high-quality companies to grow together, or by keeping a light position or being out of the market, waiting for the market to make mistakes.
3. For Most People
If you approach with an investment mindset, or if you invest most of your savings, you must seriously study and research, and continuously try and make mistakes with a small amount of capital to accumulate experience. Sooner or later, you will find your own way.
If you are just casually investing as a form of entertainment, like playing mahjong, then consider this advice as if it was never said.However, most people enter the market with the mentality of making a lot of money from the start, and then they do not study and research diligently. They spend their days chasing the market, buying high and selling low, and speculating on price differences, constantly inquiring about news. That is gambling, and it is inevitably a bleak ending. It is best to exit early.
Investment is an industry with both a very low and a very high threshold. The so-called low threshold means that there are basically no restrictions in this industry. You don't need to look at anyone's face, and you don't need much capital. Just open an account and deposit some money, and you can enjoy it. However, the low threshold of entry does not mean that this industry is very beautiful. Once you enter the stock market, it is like the sea. If you love someone, let them invest. This may be heaven. If you hate someone, just coax them to speculate in stocks. Here, it will be hell. The reality of this industry is that most people find it extremely difficult to make money through investment. Therefore, it is not surprising to say that investment is an industry with a very high threshold.
Everyone knows that the "10,000-hour rule" exists in many fields. In the real economy, as long as you are willing to spend time and immerse yourself for ten or twenty years, you will basically become a leader in the industry. However, the investment industry is not the same. If the method is wrong, the longer you stay, the harder you work, the further you will be from your goal. In our daily interactions, we know or know through others, there are countless people who have invested for more than ten years and have lost money. What has caused this situation? Many people think it is because they have not mastered the method, but in fact, it is not. All techniques and methods are actually minor details. The so-called skill is a technique, and the Tao is the foundation. The most important thing in investment is what your investment philosophy is (investment concept), and what your trading system is.
Different understandings of the market and investment directly affect our trading system and results. If you think stocks are for speculation, then all your operations should be based on speculation, with the goal of price differences. At this time, public psychology, market sentiment, capital flows, and news should be the focus of attention; if you think stocks are for investment, buying stocks is buying company equity, then all your operations should be based on the company's value, considering the basis should be the company's development, and making money from the company's development.
What is investment?
At least it is to study the company's value, to a certain extent, control the risk, and expect a suitable rate of return. But in actual operations, just studying the company's value has basically eliminated most people.
Because many people invest tens of thousands or even hundreds of thousands to buy a stock, and the time to make a decision may only be tens of seconds or even shorter. The reason is simply that a colleague or friend said that a certain stock will definitely rise. In terms of logical research and analysis, it is even less sufficient than when you buy a mobile phone or home appliance, and consider the brand choice or cost-effectiveness analysis.
Then think about it in reverse, if you don't even know what the company you bought is doing, how do you know that the company will make money for you. In summary, all the factors that make you money may just be because you are lucky.Many people believe that research and analysis are very professional and difficult, but in fact, they are not. Here, I would like to share a more general top-down analytical approach.
1. Macro Environment: Understand the macroeconomic situation, social development trends, and the impact of macro policies, etc.
2. Industry Environment: Study the characteristics of the industry in which the company operates, supply and demand conditions (upstream and downstream industrial chains), development trends, and competitive situations.
3. Company Situation: Research the company's business model, life cycle, competitive advantages, new growth factors, and the situation of the management team.
4. Financial Situation: The company's own profitability, cash flow, debt, and pledge situations.
For example, when the macroeconomic environment is rapidly developing, most cyclical industries, such as industrial enterprises, will enjoy the benefits brought by economic development and maintain high-speed growth. On the contrary, when the economy is not good, it is necessary to choose industries that are not closely related to economic development, such as industries that are heavily invested in by the government. They will receive government orders and maintain stable performance.
Similarly, if an industry is rapidly developing, all companies within the industry will enjoy the dividends of this development and grow rapidly, just like the smartphone industry chain many years ago, as well as the mobile internet industry that developed with the growth of mobile phones. However, if the industry's growth rate is already very slow, the companies within the industry are unlikely to develop rapidly, and your investment is also unlikely to achieve excess returns.
After considering the overall and intermediate environments, analyze the company's own situation, competitive advantages, profitability, growth factors, and risk points. Comprehensively analyze the company's value to determine whether it is expensive or cheap.
What is speculation?
In fact, speculation is not what many people think of as speculation and profiteering. The most important aspect of speculation is the "opportunity," which is the grasp of opportunities and timing. For example, policies, unexpected events, or even changes within the company itself can become the main logic of speculation.For instance, the supply-side reform of that year led to a short-term surge in the performance of steel companies, but this was unsustainable. Therefore, the rise in stock prices was actually just a phase.
Another example is the recent swine fever, which has caused a sharp increase in pork stock prices in the short term. Although the price of pork has not changed temporarily, the expectation is that due to a significant reduction in the number of pigs, there may be a sharp increase in prices in the second half of the year.
In fact, in the books of many speculative masters, they generally pay special attention to the three points of "shape," "momentum," and "timing." Speculation is not only about timing but also about the shape and momentum of the market.
No matter what, both investment and speculation are proven methods to make money, and there is no pure good or bad. Even if your level is not that high, a clear logic and thought process can help you effectively analyze and summarize when you fail, and you can become more and more courageous in battle.
If you are not clear about what you want, it is considered gambling behavior. Regardless of winning or losing, it is actually attributed to luck, which is absolutely not advisable.
Answering this question can also be quite blunt: the winner is the king, and the loser is the bandit.
Joking.
In fact, this is a question that stock market god Buffett has always been trying to explain to ordinary investors.
In fact, stock trading has always been divided into two factions, one is stock market gambling, and the other is stock market financial management. The attitudes, concepts, and means are different.Stock Market Speculators: Zero-Sum Game, Focusing on Short-Term, High Gambling Nature.
The zero-sum game, also known as a zero-sum game, is exemplified by winning money in Mahjong or poker—when someone wins, someone else loses. If we consider a 4-person Mahjong game as stock trading, the gains and losses are individual, and the total sum of wins and losses is always zero.
Why don't those seasoned stock market investors, who experience wins and losses every day, exit the market?—They may not necessarily all make money. What they earn is the sense of achievement, pleasure, and excitement brought about by the process of the game, fighting with the market makers, and facing dangerous situations.
The stock market is a channel for enterprises to seek social financing. In theory, only stocks with recognized value will be favored by the public. However, from a short-term perspective, the daily rise and fall of various stocks cannot all be explained by "enterprise value," such as junk stocks and demon stocks suddenly being hotly pursued and hitting the daily limit—most of these are zero-sum games, speculation games of reaping and being reaped that are unrelated to economic trends and value investment.
Stocks themselves are neutral, with no pejorative or laudatory connotations. If they are endowed with any meaning, it must be the people who endow them with it.
For example, a kitchen knife is just a tool. If you want to use it to cook, it's fine; if you want to use it to do something bad, that's a personal issue.
Similarly, stocks are like kitchen knives.
If you buy stocks, it's an investment, a rational one, then it's a tool for making money. If you want excitement and gamble on the rise and fall completely according to your own inspiration, then stocks are a gambling tool for you. In short, stocks are just tools, remember that's right.
It is undeniable that many people do not have the ability to invest in stocks, but they think they do. This is what Buffett calls a "tragic story."
Before investing in stocks, everyone must correctly understand themselves and think about whether they really have this ability. Underestimating your ability is not a big deal, at most you earn less; overestimating yourself will lead to a significant loss.So, correctly assessing oneself becomes particularly important.