interesting post. i like to think about the dynamic nature of languages from time to time.

I think you are right, it is a bit hard to tell what my main point is in this article. That coming from the fact that I am just kind of writing stream of consciousness on these.

But I think the main thing I was trying to establish here is that the difference between “good” and “bad” gambling (from a purely financial perspective) is risk management. My point is that risk management is a universal factor across all types of financial investments, trades, games … etc.

Certainly, you could go the extra step of then deciding which of those financial activities you choose to participate in based on the “non-financial” variables you mention. However, I don’t think it changes the fundamental bottom line of risk management. In other words, participating in something that has great moral or spiritual payoff does not, in my opinion, justify the lack of risk management. I think you have to have risk management at the basis of any investment for it to be legitimate and then from there you can determine if it meets your other objectives.

the second might be whether or not there is a difference between some kinds of gambling w/money and others, and if so where is the line between respectable and deplorable “gambling”, which i think is even more interesting, b/c i have a hunch most of our answers would reflect culture and social status more than they would principle, at least our initial reactions…. (and what kind of gambling is considered “respectable” among our current peers - lotteries and slots vs. online poker, for example…)

but i’m going to go a slightly different direction in saying that you could make a number of cases for these issues from solely the investor’s point of view, and from an objective single bottom line stance (profit).

but does it matter where the money is going, and what it is being used for in some way? are all businesses equal in terms of value and contribution to economy / society / culture? are all investments equally socially responsible? (or “kingdom” responsible, if one is inclined to think about it that way?). if your investment aids a company that uses slave labor at some point in its production chain, is giving your money to support slaveowners as morally reprehensible as money that’s used to provide large amounts of free (albeit cheap-o) liquor to casino patrons in order to free up their spending?

i guess my personal bias would be that investment is stewardship, and it seems wise stewards should have multiple bottom lines for the investment of their resources that look at returns from broader perspectives than just financial, economic as well as social, cultural, and even biblical(?).

so, in that sense, i guess i’d say not all “gambling” is created equal, but the reasons i think it’s not (and the scale i’d likely create to categorize wise vs. unwise investing) may not be devised solely from financial data.

Mutual funds do have decent probability of success and that probability is increased the longer you stay invested in the fund. But the trade off is that they have a lower reward/risk ratio. You are risking a lot to make a little.

Move into some options trading products and you can create positions that provide any possible combination of reward, risk and probability. You can risk a little to make a lot, but of course your probability goes down. Or you can do higher-probability trades that have lower reward / risk. Is it gambling to get involved in these products?

Move from there into the high-flying managers at Bear Sterns who leveraged themselves 90/10 on debt and collapsed when their underlying instrument (housing) lost value. Was that gambling, or was it money management? What about the people who invested in the products those managers were managing? Were they gamblers, or were they investors that just got unlucky?

As we head down the spectrum toward casino gambling or lottery playing, what makes the difference and at what point does it move from respectable to deplorable? It all has risk. It all has reward. And it all has probability. Where is the good and where is the bad?

I’m not just trying to be difficult here, I really am trying to work through this. Thanks for your feedback. Any more thoughts?

Take any 10-year period in the stock market’s history, and you see that it has earned money every time. Any 5-year period, and it’s earned money 97% of the time. That’s not that much of a gamble, if you’re a long-term investor.

I will say I like this line:

“If you’re going to place bets with casinos, you’re most probably better off betting on their stocks than on their tables.”

It brings up an interesting thought — that is, casinos are only a game to those people walking through the door. To the casino owners (i.e. shareholders) they are a business, and a highly calculated one at that.

I’ll feedback more after a bit. Anyone else have thoughts to share?

1. Odds. The odds of losing everything in a passably decent mutual fund is extraordinarily low. The odds of losing everything in a casino is 100% on a long enough time line. The stewardship involved in investing in a fund vs. going to a casino is substantial.

2. The underlying elements you’re ‘betting’ on. With funds, you are gambling on a) an economic system with a proven track record (the ethics of that system are immaterial in this case) and b) a fund manager’s ability to select companies that will thrive in that economic system given current economic realities.

The probability of capitalism collapsing and the manager only picking companies that go bankrupt very quickly is very low on any kind of reasonable investment timeline.

So with funds, you’re hoping your outcomes are CONSISTENT with the odds.

With casino games, you’re betting that you get lucky. Playing blackjack out of a 1 or 2 deck shoe while using basic strategy and counting cards is about the only way you can walk into a casino with the odds even slightly in your favor.

In most cases, the odds are dramatically against you. So with casinos, you’re hoping your outcomes are INCONSISTENT with the odds.

Again, bad stewardship in the case of casinos.

Investing in funds ends up looking like good stewardship. Going to a casino looks like horrible stewardship.

If you’re going to place bets with casinos, you’re most probably better off betting on their stocks than on their tables.

I’m sure there are other considerations, but those are a couple of pretty straightforward ones.

I’m not necessarily advocating a system where you can’t choose your own doctors. In fact, many of the other countries systems I heard about on NPR do have complete freedom of choice. The US isn’t the only place where choice of doctor is important.

The biggest difference that I see between the US system and other countries is that in the US, the consumer (us) bears most of the burden (cost). In other countries, things are subsidized and regulated to the point that actually the doctors and hospitals are the ones going bankrupt and having trouble making ends meet.

Neither extreme works well. I don’t advocate throwing the US system out and starting over because it’s highly unlikely we would end up with something better. I think small changes and tweaks are the better way to go.

First, I feel that healthcare is extremely expensive. Although my husband’s employer pays for his portion of health insurance, we pay almost $700 a month for my daughter and me. That’s insane as it’s very difficult for most people to pay those kinds of premiums.

Second, in my case, every penny I’ve paid has been worth it. I have had two back surgeries and although I have some residiual problems, either one of them could have left me paralized. I don’t relish the idea of being put on a waiting list and getting the next general surgeon that has an opening on his schedule. If someone is going to be cutting on me, shouldn’t I be able to make the choice of who that will be?

This subject is distressing to me because I’m very well aware that I’m one of the lucky ones that can afford quality healthcare. It deeply saddens me when I hear of people who die or lead a poor quality of life because they can’t afford to go to the doctor.

You’re right. What we’re doing isn’t working. I, too, hope that someone smarter than me can figure out what to do. On the other hand, I don’t want my choices taken away.

Of course, military healthcare is free, so who am I to talk. Except that I know how poorly-run it is, and what a hassle it is. And I can see that would be extended to everyone in the country if we went to a socialist system.

Good topic though. Nice discussion.

@Jimmy — unfortunately, I tend to agree with you. Most people don’t think long term or outside of themselves. I’m not pointing fingers because I personally think about myself and my situation far more than I show concern about anyone else. Fixing this one would require us to operate outside of that, and I’m not sure that it’s possible.

But that’s just me. I have a limited perspective as well. I would just never trust the government to solve our problems with more taxes and more regulations, since that has never worked in the past.

And, like you, not a Michael Moore fan.