Tuesday, December 04, 2007

Investing or gambling?

Do you consider playing the currency markets investing or gambling? The average person would probably say investing as gambling is something you do while sipping cocktails and smoking cigarettes. As I side note, I only do the former.

Those of us that have taken a finance class or two know that if you're not a large multinational who is buying up currency to hedge international investments, playing the currency markets is nothing more than internet gambling. You're simply betting that a currency (e.g. dollar) will go up or down. That’s gambling.

Investing on the other hand is when you buy an asset and have that asset work for you to gain wealth. Now you can probably make money in the currency market if you know what you're doing. But remember, you're still gambling and eventually can get burned.


Scooter said...

I can picture there being an art to it, but it still smells like a gamble on par with roulette. I'm still waiting for the 60 pounds I have in a bag from my trip to London to appreciate by six or seven cents before I return it to the bank.

David said...

I don't think its gambling if you some knowledge that the dollar is going down. Like for example, the US exported trillions of $dollars because everyone in the world wanted dollars (it is/was the reserve currency of choice) and now its likely people will want another currency, euros for example.