Is the stock market considered gambling?
Question:
Is the stock market considered gambling because they are no guarantees and it involves a risk of loss? When one buys stock they do it in hopes of that stock going up and that could be considered covetousness, greed and not being content; otherwise, they could just put their money in the bank where it is guaranteed (at least the principal is). In some cases when a stock goes up it's because their competitors went down. Options and futures are other examples of having to lose money in order for someone else to make money. I would appreciate your help with this.
Answer:
Is starting a business considered gambling because there are no guarantees and it involves a risk of loss? The answer is no, which then points out that your definition of gambling is inadequate. What makes gambling wrong is not the risk, though gambling uses risk.
"A simple definition of gambling would be, desiring the possession or possessions of another (the prize), the gambler creates a risk (that of losing his own possession) in an attempt through chance to gain the possession or possession of another with nothing given in exchange. Gambling takes many forms: card games, dice, numbers, betting, slot machines, sports pools, punch boards, bingo (for money or prizes), raffle tickets, matching, and even pitching pennies"
A business trades in products that are bought and sold or involves the selling of services. In gambling, a prize is offered for an investment in a game of chance, with nothing being given in exchange. For example, in a lottery, you give over cash, but all you are investing in is the risk of the game. You don't purchase a service or a product.
Yes, there are people who treat the stock market as a form of gambling, but what the stock market actually is is a way for people to invest in a business. You are loaning a business some of your money so they can produce goods or services. In exchange, you own a portion of that business. As that business succeeds, the value of your portion of that business increases as well. That is why successful investors analyze the businesses they are investing in to make sure they are worth taking part ownership of the business.
You speak of investing in a bank, but banks use the funds you place there to make loans to people (a deal involving risk) and to invest in businesses through stocks. From the profits made, they pay a portion back to those saving money in their institution. Thus, you are loaning the bank money in exchange for an interest rate to be paid back to you -- basically the same thing as investing in a business. Banks fail because of bad investments. Currently, savers in banks are protected by the government through an insurance program up to a certain amount, but before that government action, savers took risks that are now partially covered by the government. Of course, governments can fail too, so risks are still present.
See Gambling regarding why trying to get something for nothing is wrong.
