Due to the No Arbitrage Principle, in theory, there should always be risk when you invest, however investing is seen as smart common sense which every adult needs to do whereas gambling is a poisonous addiction we need to curb, what’s the difference? To me, it seems that only when the market is exploitable and not fair, is there a true difference, apart from the immediacy of the results of many types of gambles vs the drawn out nature of investments
In: Economics
The difference between gambling and investment is earnings. Gambling is purely speculative. A lottery ticket once bought may be worth a ton of money, but probably its worthless. Its all up to magic number coming out of ball machine, there are no real productive assets behind it.
If however you buy an apartment and rent it out, the rent payment is very real revenue and most of it pure profit. And also the underlying asset is concrete physical thing with real value and utility.
Most investments are honestly somewhere between the two, there is still still a speculative aspect to every investment, a company may succeed of fail beyond expectations and thus go up or down in value, but the important bit is that it earns or is expected to earn money for its owners no matter what the market price is.
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