Because gambling is ultimately just betting on a random number generator that's actively weighted against you. Investing is betting on the competence of an executive team to run a business. One of these, you have no control over. The other one is a win-win situation. If the business does well, you do well.
It's like saying that because your sibling or friend ended up in a shitty relationship that you need to be celibate for your entire life . . . no, you don't. Just because Company A blew up doesn't mean Company B will.
And to be clear, I'm not a fan of stock picking as a core investment strategy, but I'm talking about dollar-cost averaging in equities (low-cost index funds) as opposed to stashing cash under the bed. Long-term, betting on the economy is free money.
By the strict definition of gambling, the grandparents are correct: Buying stocks (even a diversified mix of stocks) is technically "wagering something of value on an unknown future event." We don't know whether stocks will go up or down, individually or in aggregate. It is an unknown future event. For the last ~100 years, the S&P 500 has had positive returns 73% of years, but there is no reason to believe or disbelieve that this distribution will continue for the next 100 years.
By that definition, everything is gambling, because all activities involve risk. Even keeping your money in an FDIC-insured bank account doesn't protect against inflation risk, or against the risk of the U.S. government or financial system collapsing. So this definition of "gambling" is useless for practical purposes and we should pick a better one (or just stop using the word in this kind of discourse, since it tends to confuse people and provoke semantic disputes).
> "wagering something of value on an unknown future event."
But that's so broad, every meal is a gamble. Taking opportunity cost into account as something of value, and the fact that the future is uncertain, literally every action is a gamble.
There are more options than this. My savings account gives something above 4.5%, and if that rate does go down, there's CDs and stuff like that. And I assure you, I'm not poor, lol :)
I already have more money than I know what to do with. I'd rather spend my time on things I enjoy (arguing on HN) than things I hate (understanding or caring about the stock market).
It may not matter for you, and that's fine. But it matters for people who don't have more money than they know what to do with and who need to be able to fund a reasonably comfortable retirement.
> Investing is betting on the competence of an executive team to run a business. One of these, you have no control over.
But again, you're asking people to have a lot of trust in this executive team. Unless we have the legal and regulatory framework that can enforce that trust it all becomes very sketchy. And right now it seems like the legal and regulatory frameworks are under attack. It's becoming more a game of "who you know" and favor currying. That kind of erosion of trust is really dangerous for the markets.
> Investing is betting on the competence of an executive team to run a business.
Incorrect. Public markets investing (which is what you're talking about here) is about betting that the market is undervaluing some business. This is fundamentally different from "betting on an exec team". The price matters a lot.
I mean, there's also some risk premia and some liquidity risk that you're being paid for, I guess.
But "betting on the competence of an exec team" is just wrong.
The point is that you are betting on the fundamentals of a business. Or a basket of businesses. And it's not just about whether a business is under/overvalued. That matters for growth stocks, but there are also stocks you can make scads of money on over the long term because they are boring, stable businesses that pay a consistent dividend you can then reinvest. Or boring, stable low-cost index funds that just track the market.
Gambling is the total opposite of that. Investing in an equity is saying "I have reason to believe this business or basket of businesses will continue to return profits to their shareholders." And you can do research into their financials, their industry, and so forth to make an informed decision. Gambling is just that . . . random chance in a game that's ultimately rigged against you. Investing is almost the opposite of gambling.
It's like saying that because your sibling or friend ended up in a shitty relationship that you need to be celibate for your entire life . . . no, you don't. Just because Company A blew up doesn't mean Company B will.
And to be clear, I'm not a fan of stock picking as a core investment strategy, but I'm talking about dollar-cost averaging in equities (low-cost index funds) as opposed to stashing cash under the bed. Long-term, betting on the economy is free money.