Investment in stock market

[barcsimalsi]

Barcimalsi, can I suggest that asking a random bunch of Buddhists about investment strategies is about as usual as asking a random bunch of financial planners about Buddhism and that you would be better off asking that sort of thing elsewhere? I'm sure there are forums on the subject, and of course there are professionals intent on enriching themselves by convincing you they can enrich you ...

Now ... if there is more to be said on it.


Kim

No problem with that, thanks.

[Mr Man]

In my opinion if you are "playing" the stock market it is gambling.

Can you define what you mean by "playing" or "not playing"?

From my understanding, the main objective of buying shares is as simple as starting a business with the principle of gaining profits by buying stocks/goods at low value and sell them at higher value. The difference is the rising value of a stock has no limit.

Sometimes i think it makes sense too to say that to start a business with a capital is like gambling. Perhaps i had a confusion of the meaning of investment and gambling.

It is difficult (for me) to define precisely because the risk element is always there with investment. I think the degree of recklessness, which isn't always immediately apparent, involved and our attitude towards the investment are indicators + motivation.

[Schaublin]

have a look here ...
Gold should not be seen as an "investment", it is not - it pays no dividends but it does what it always has, preserves purchasing power through time

Schaublin, you have pulled the thread off-topic - unintentionally, I'm sure, but it would be good to get back back to the the ethics of investing. Just one thing before we do: Tverberg is smart but one-eyed (oil-mad) so she is misleading.
Barcimalsi, can I suggest that asking a random bunch of Buddhists about investment strategies is about as usual as asking a random bunch of financial planners about Buddhism and that you would be better off asking that sort of thing elsewhere? I'm sure there are forums on the subject, and of course there are professionals intent on enriching themselves by convincing you they can enrich you ...

Now ... if there is more to be said on it.


Kim

Yes, sorry about that.

On topic:

Unless one is able to directly provide for oneself, it is impossible to avoid using the debt based fiat system. So, irrespective of the wholesomeness of any commercial activity, participating in usury (which is what the current system is based on ) is unavoidable. I know this opinion may seem extreme but if one goes down the rabbit hole far enough, one has to accept what one finds.

Usury is predation.

[barcsimalsi]

An article about distinguishing investing and gambling.
http://www.investorguide.com/article/12 ... investing/

So what’s my resolution to this definition conundrum? Well, the purpose of words is to communicate concepts. So it doesn’t really matter what definitions you use, as long as you and the person(s) you’re communicating with are clear about what is meant by those words. And even more importantly, as long as you know what you’re doing, investing or gambling, before you do it.

But with that said, it would be beneficial if everyone could agree on what the terms mean, so we don’t need to make our definitions explicit every time we want to use them. To this end, I offer the following definitions, which are built from the various characterizations in the above section:
Investing:

“Any activity in which money is put at risk for the purpose of making a profit, and which is characterized by some or most of the following (in approximately descending order of importance): sufficient research has been conducted; the odds are favorable; the behavior is risk-averse; a systematic approach is being taken; emotions such as greed and fear play no role; the activity is ongoing and done as part of a long-term plan; the activity is not motivated solely by entertainment or compulsion; ownership of something tangible is involved; a net positive economic effect results.”

Gambling:

“Any activity in which money is put at risk for the purpose of making a profit, and which is characterized by some or most of the following (in approximately descending order of importance): little or no research has been conducted; the odds are unfavorable; the behavior is risk-seeking; an unsystematic approach is being taken; emotions such as greed and fear play a role; the activity is a discrete event or series of discrete events not done as part of a long-term plan; the activity is significantly motivated by entertainment or compulsion; ownership of something tangible is not involved; no net economic effect results.”

Though it isn't accurate, it points out every possible aspects on the subject.

Sigalovada Sutta:

"There are, young householder, these six evil consequences in indulging in gambling:
(i) the winner begets hate, (ii) the loser grieves for lost wealth, (iii) loss of wealth, (iv) his word is not relied upon in a court of law, (v) he is despised by his friends and associates, (vi) he is not sought after for matrimony; for people would say he is a gambler and is not fit to look after a wife.

Besides the second and third, the consequences of investment does not really comply to the Buddha's warning of gambling so i think this is how buddhists distinguish investing from gambling.

[puppha]

Hi Barcsimalsi,

Thank you for the guides everyone.
Another question, what if i don't actually own the shares of the "bad company" but rather paying to the buying call options strategy?

If you trade your job for stock gambling, you are likely to lose your sleep and significant amounts of money.

If you want to invest to provide your some income, invest in big blue-chip companies that pay good dividends with a low P/E ratio (less than 15 is good generally speaking).
Rationale:
- big blue-chip => less chance to go bust
- pay good dividends => less chance they cook the books + this is your income
- low P/E => you don't overpay for what you get

Time horizon: you buy and never sell (unless the company gets into very significant troubles and you risk: dividends being cut and/or permanent loss of capital). Proceed slowly and cautiously. Don't look at the prices of your shares, just look at the dividends coming in.

If you want to do anything else, you need to get properly educated on investing and financial analysis.
Call-options, CFD, trying to find the next Microsoft/Google/Apple with 1000% share price increase in a year are an excellent way to lose money very fast. Don't believe you're smart when it comes to investing. You're dumb and accept it. Small investors who think they're smart do lose a lot of money. I am talking from experience, now I am very cautious with very decent results.

Good luck!

With Metta

PS: I am not qualified to give any advice, including everything posted in this email! Follow at your own risk!

[barcsimalsi]

Thanks for the advice puppha.

...I am talking from experience

That was good enough.