Day trading is gambling. Buying triple levered ETFs is gambling.
Investing in a diversified index is NOT gambling, because it isn't a zero-sum game, where you have winners and losers. You are investing in the growth of the economy as a whole.
I’ve genuinely never understood why this is so unintuitive to many otherwise intelligent people I’ve known. Over a long enough time horizon (and with prudent management of risk as one ages/approaches retirement) serious increase in wealth is all but guaranteed short of the US absolutely collapsing. And if that happens, then we’d all have bigger fish to fry.
There are no guarantees (other than maybe death and taxes). There's only the likelihood that as long as the market is rational you will make money in the long run. As soon as you start setting odds on success, it becomes gambling.
It has worked to this point, but past returns are not guarantee of future returns. On other hand well both political parties really enjoy line going up, so even if it leads to inevitable destruction lot will be done to keep it going up.
Take all your life savings into a savings account? Well, you could lose it all if the FDIC and your bank collapse.
Take it all into cash under your basement? You are gambling that you won't have a house fire, that you won't be robbed, etc.
Keeping US dollars at all is gambling that the US dollar retains value - there are plenty of examples of currencies completely collapsing.
i was very much infatuated by the idea of total reliability on a global scale and couldn't wait to talk about the CAP theorem with anyone who would listen. Read much of the research. I still love to flip through Designing Data-Intensive Applications by Martin Kleppmann occasionally.
As I was learning about said company's server racks there was a component that I asked an engineer on my team about – "Isn't that a single point of failure?"
He looked at me, exhausted and stressed out, and just said "Take it far enough, the Earth is a single point of failure."
I got the point.
I mostly agree with your assessment, but lots of governments have collapsed, and that doesn't mean that everyone loses EVERYTHING. Some people are able to retain some assets, if they have them in the right form.
I do think some of the hedges people take don't make sense, though... if your hedge is to keep a bunch of cash around, you aren't hedging against your risk because your risks are correlated - the event that will cause all your stocks to go to zero will also cause the dollar to go to zero.
If you are truly hedging against the collapse of the US, you would try to get assets that would survive that... lots of possibilities, and some of them make more sense than others, but all of them have their own risks, and some of those risks are way more correlated than people realize.
As such, if you setup auto-invest into SPY and never look at it, you're not gambling. You don't know if you're winning, you're not thinking about it like a bet.
If you go with your definition of gambling then, well, taking your salary in USD is gambling because the USD, just like SPY, could go to zero and you lose it all.
So, if you run a Casino, I wouldn't call it gambling because your expected value is greater than 1.
Everything is a 'gamble' in the sense that there is a chance of ruin. It is a gamble to drive your car to work, because you could die in a car accident. People don't normally call it gambling, though, because it doesn't fit what we mean when we say gambling - taking a sub 1 expected value risk for the chance of a big return.
Is running a plumbing business gambling? Is opening and running a restaurant gambling? (Sure there's risk in running a business but risk is not the same as gambling.)
Because owning stock is basically owning a slice of a business. Owning a unit of a S&P 500 ETF or mutual fund is owning a slice of five hundred businesses.
Yes, it is a gamble to start a business, but it isn't gambling.
Yes you have more agency in deciding how to run the business, but you have little to no agency about the economic environment you're in. You're highly concentrated in one financial asset, which means any little hiccup can have huge repercussions for your life, especially since you probably only have one business in one particular economic niche.
Whereas if you own a portion of dozens/hundreds of businesses, you have less control of how they are run, but no one business doing badly will impact you as much, nor even one particular economic segment (energy, transportation, tech, agriculture). By owning a broad index of companies you are more diversified.
Further, with modern financial products you can diversify not just between market segments (S&P 500, Russell 3000), but across countries (which deals with the now do Japan retort).
Seems like someone who bought any time since last August and wanted to sell now would be a loser, right? Is now a good time to buy? What if the tarriff horrorshow continues and Apr 2 looks like a cakewalk? Should I put off buying until some time later?
I hate all of this and want to spend my time any way else. So, I do.
The parent is talking about longer term investing, about buying and holding diversified indexes for 10+ years.
Statistically, if you bought and held the S&P 500 for ~30 years, any day since its inception was a good day to buy.
So yes, last august was a good time to buy. Now is a good time to buy.
What the parent is talking about is the way of investing where you do not spend any real time on it.
The bare minimum time is to just setup an autoinvest in vanguard to buy some dollar amount of a broad index fund (like VFIAX) each month, and then never look at it again until you're ready to retire, or have to make a down payment or such.
When you take out money, you don't try to time that either, you just accept the rate is what it is at the time you sell, and only sell the amount you need.
And then, finally, if you want to not think about it much, hardly spend any time, but be slightly more diversified, you could do a 3-fund portfolio, setup autoinvest, and then adjust the autoinvest once a year to push it towards the desired balance. That's a few hours of initial setup time (reading Boggleheads wiki, setting up accounts and auto-invest), and then maybe 1 hour each year from then on (checking rough percent, adjusting auto-invest numbers to push more money towards anything that's lower than desired).
See: https://www.bogleheads.org/wiki/Getting_started and https://www.bogleheads.org/wiki/Three-fund_portfolio
Most growth comes large highly capitalised companies with money to invest in expanding knowledge and capital.
The startup making it big is still relatively rare thing in the grand scheme things.
And the majority of small businesses struggle or stay the same size for ages because they're operating in competitive markets.