How does the investor look like a casino owner?

25 сентября, 2021 от fake Выкл

We need to agree with readers, who I will call the investor on the pages of this blog, and who is not. Because, it seems to me, from here this terminological confusion there is a lot of unnecessary swearing and disputes in the internet.

The essence in which — the word «investor» is now called anyone in the long-term investor to Dale-trader and scalper. And from this and flow the clashes on the topic «Investments — a risky business» and «You will lose everything to a penny on this exchange.»

In fact, people buying securities share, by and large, two «class» — investors and speculators. Investors are oriented to own paper for a long time. Of course, «long» each has its own, but this abstract term will solve this abstract term. Ideally, an investor can own paper forever and makes her grandchildren. A speculator when buying in advance plans to sell paper in the near future — when it reaches certain price indicators. Speculent scalper can own paper literally seconds.

So what is the investor look like a casino owner?

The thing is what. Speculant, coming to the stock exchange, tries to guess the shares. In fact, he is likened to the player in a casino, who wants to guess «Red» or «Black» falls on the roulette. Mathematics plays against speculatory. And life shows us that you can’t argue with mathematics — 98% of speculators lose and leaves the market leaving all your money on it. At the same time, 80% leaves all its money on it in the first year. Here is such sad statistics.

Why does mathematics play against speculatory? He plays a game with a negative mathematical expectation. In order not to deepen deep into the theory, I will explain on a simple example. Suppose our speculator guess in half cases. That is, 50% of transactions are profitable, and 50% of transactions are unprofitable. At first glance, he should stay with his own — but no! In fact, he loses, because among other things, the Commissions of the Exchange and Broker play against him. That is, his chances of winning and loss are not equal. Mathematically he has more chances to lose.

However, in the case of the investor, everything changes. If he buys shares of stable large companies (blue chips), does not use credit shoulder and simply waiting for several years, then statistics and mathematics begins to work on it. These companies earn money. Their business is growing. They pay a dividend investor, and the cost of their shares on a long time cut is most often growing.

Thus, it turns out that in the example with the casino, the investor is rather the owner of a casino that wins in mathematical and statistical laws — slowly, but right. And the speculator is a gambling player who comes to the casino (to the market) with almost guaranteed chances to tear all the money.

But but the speculator, of course, is more fun. For no accident, it is the term «game on the stock exchange» precisely. It is quite similar to the casino — the mass of adrenaline. The result is true, the same. But, for the pleasure, as you know, you have to pay.

Investor on the market Instead of receiving pleasure from the game and Azart shows an excerpt and patience. And the securities market is just a place where money goes from greedy to patient.

And over time, turn these patient people in real millionaires)))