MyMoney Online

Why investing in shares is not like gambling

Share values are extremely volatile over short terms.

In other words, they go up and down a lot over the course of a day, month or even, sometimes, a year or three.

So, it’s a “gamble” to invest in shares if you’re in it for a quick gain.

However, if you remain invested in a spread of companies for five to 10 years, or more, it’s as far from gambling as chalk is from cheese.

Gambling is a zero-sum game

If you lose at the casino, “the house” takes from you and gives nothing in return.

No value is created.

When you invest in the stock market you’re buying pieces of companies.

You become the owner of the companies’ assets and share in their profits.

When share values fall

When the value of a share you own falls, you’re not left with nothing.

You still own the same proportion of that company (admittedly one that is worth less than before) and next month (or year) the stock might be up again.

You still share in the profits.

Tata ma chance

Stock market investors, or their fund managers, don’t just randomly chuck their money into an investment.

There might be some uncertainty regarding outcomes in the short- to medium-terms, but you're not simply hoping that luck is on your side.

Long-term values are not volatile at all

Sharpeville, the Soweto Uprising, sanctions, the State of Emergency, the Rubicon Speech, Boipatong, early 90s unrest, energy crises, multiple recessions, war, financial crises and so on and so forth…

Yet, have a look at the chart below.

The value of shares over longer-terms is not volatile at all.

It’s not gambling if you’re 90% sure you’re going to win.

Subscribe to our Business Wrap Newsletter


This article first appeared on 702 : Why investing in shares is not like gambling


Recommended

by NEWSROOM AI

CapeTalk welcomes all comments that are constructive, contribute to discussions in a meaningful manner and take stories forward.

However, we will NOT condone the following:

  • Racism (including offensive comments based on ethnicity and nationality)
  • Sexism
  • Homophobia
  • Religious intolerance
  • Cyber bullying
  • Hate speech
  • Derogatory language
  • Comments inciting violence.

We ask that your comments remain relevant to the articles they appear on and do not include general banter or conversation as this dilutes the effectiveness of the comments section.

We strive to make the CapeTalk community a safe and welcoming space for all.

CapeTalk reserves the right to: 1) remove any comments that do not follow the above guidelines; and, 2) ban users who repeatedly infringe the rules.

Should you find any comments upsetting or offensive you can also flag them and we will assess it against our guidelines.

CapeTalk is constantly reviewing its comments policy in order to create an environment conducive to constructive conversations.

Read More
You’re a f*cking grownup. Manage your money like one

You’re a f*cking grownup. Manage your money like one

Sam Beckbessinger on her book “Manage Your Money like a F*cking Grownup: The Best Money Advice You Never Got”.

Need a loan? How to improve your credit score (before you apply)

Need a loan? How to improve your credit score (before you apply)

Get a free credit report, then follow these five tips and see by how much you can improve your credit record.

5 rubbish beliefs about investing that are keeping you from getting rich

5 rubbish beliefs about investing that are keeping you from getting rich

Financial advisor Warren Ingram rubbishes some popular, yet blatantly untrue ideas that are keeping people from growing wealthy.

How to protect your wealth when the JSE is falling

How to protect your wealth when the JSE is falling

How to protect your wealth should the JSE start to weaken...

Why you need a pension fund (or retirement annuity) even if you own a house

Why you need a pension fund (or retirement annuity) even if you own a house

Many people falsely believe they do not have to save for retirement because they own the home they live in.

4 beliefs about shares that keep you from growing wealthy

4 beliefs about shares that keep you from growing wealthy

4 popular, yet patently false, beliefs about stock market investing that's holding you back.

Popular articles
Research probes citizens views on Cape water crisis

Research probes citizens views on Cape water crisis

The Global Water Leaders Group will present preliminary results of a study evaluating Cape Town's water crisis.

Canada has legalised marijuana, could South Africa follow suit?

Canada has legalised marijuana, could South Africa follow suit?

Independent Journalist Kevin Bloom says its part of a global movement towards the recognition of the plant's properties.

SIU report: Corrupt and fraudulent dealings worth R1.2 billion in Gauteng health

SIU report: Corrupt and fraudulent dealings worth R1.2 billion in Gauteng health

The report reveals that former Gauteng Health MEC Brian Hlongwa and 11 others are involved in the irregular expenditure.

Cape dam levels on the rise, but not all clear yet

Cape dam levels on the rise, but not all clear yet

This week, the overall dam levels are at 40.9% of total storage capacity and there was an increase of 8.8 percentage points.

What was Mabuza's business with Putin? Sikonathi Mantshantsha asks

What was Mabuza's business with Putin? Sikonathi Mantshantsha asks

Sikonathi Mantshantsha echoes Parliament's sentiments in wanting to know what was discussed during David Mabuza's visit to Russia.

Medical Aid Scheme Amendment Bill to boot out medical aid co-payments

Medical Aid Scheme Amendment Bill to boot out medical aid co-payments

Acting Chief Executive and Registrar for medical schemes, Dr Sipho Kabane, explains what the Amendment Bill entails.

First-ever CT shooter gets probation thanks to ShotSpotter gunfire tech

First-ever CT shooter gets probation thanks to ShotSpotter gunfire tech

The City of Cape Town welcomes the first-ever ShotSpotter-linked conviction and sentence, handed down this month.

Damning audio of Tom Moyane instructing Sars official to fake illness emerges

Damning audio of Tom Moyane instructing Sars official to fake illness emerges

The instruction from Moyane to the official was to allegedly avoid speaking to KPMG investigators during 'rogue unit' inquiry.

Woman exposed for calling fellow aircraft passengers the K-word

Woman exposed for calling fellow aircraft passengers the K-word

Reverend Solomuzi Mabuza says he is considering laying charges against the woman for calling him a ka***r.

Celebrity chef Siba Mtongana gets vulnerable, opens up about money

Celebrity chef Siba Mtongana gets vulnerable, opens up about money

The Money Show’s Bruce Whitfield interviews Mtongana about her attitude to money (hopes and fears, successes and failures, etc.).