Tuesday, February 06, 2007

Gambling vs. Investing

My wife Erin told me about an interesting discussion in her Sunday School class last week. Part of the conversation centered around this question:

What is the difference between gambling, which the UMC is against, and investing, which the UMC is definitely in favor of?

What do you think? All comments appreciated:


Brad said...

Speaking with the experience of someone who has never invested a thing in his life...I kinda don't know the difference. Sorry man. I think Wesley was against making, having and increasing a lot of wealth. So there's that. But, since I currently have 500 dollars in my account, nothing in savings and no cards, that's all I've got.

Larry B said...

So the BOD social principles say:

"Gambling is a menace to society, deadly to the best interests of moral, social, economic, and spiritual life, and destructive of good government"

Yet it doesn't give a particularly clear defintion of gambling. Incidentally, in my own bible studies, I haven't encountered any particular verse(s) that explicitly condemn gambling.

My own personal view is this - if one stays with the idea that gambling is at best a zero sum game and often worse, then participation in a gambling activity is akin to coveting your neighbor's goods and using chance methods to determine that distribution.

I think of investing, as delineated from gambling, as an activity that is not a zero sum game but comes with the expectation that wealth will be created, not just income being redistributed. A game that relies on chance cannot be shown to have an expectation of wealth creation.

So while there is a risk associated with an investment, that risk is accompanied by an expectation of increased wealth and should be greater than a zero sum game. (If not, it's probably shouldn't be considered an investment). If we use sound judgement then investment doesn't constitute a gamble, rather it's a judicious use of resources whereby there is some intention of increasing the overall good.

What muddies the issue, is that it's just as easy to be greedy in an investment situation and ignore large risks to attempt to get large gains. This still seems to me to be fundamentally different from a gamble, but the resultant greed is just as damaging. I think some people tend to confuse greedy investment with gambling. It's not really the same even though the sin is probably similar.

Brian said...

I think what differentiates gambling and investing is that gambling is a game of chance, while investing involves buying something real (i.e. a share of a company). I would say that irresponsible or uninformed investing is not all that different from gambling - it is simply speculation on the price of those shares.

A responsible investor is in the market for the long term, and invests in companies based on their business model and ability to create value over time. Theoretically your money goes to build something greater than yourself.

Gambling is random, uninformed and irrational.

Ultimately the difference is probably semantic. But I think being socially responsible about investing makes it a worthwhile venture.

Vinny said...

We had that discussion after putting on the Willow Creek Association's "Good $ense" workshop, especially when it comes to the parable of the talents. Is there some sort of continuum where one extreme is "bury the money", the other extreme is "play the lottery religiously", and somewhere in the middle is "prudent investing"?

I know one of my colleagues tries to tie Wesley's "earn all you can, save all you can, give all you can" to investing (specifically churches creating endowments), but that comparison rings somewhat hollow to me.

I think it comes down to a mindset and your time horizon. Folks who are gambling are looking for the instant gratification of getting something for nothing and having that money RIGHT NOW. Folks who are investing are (theoretically) taking funds that are not needed currently and putting that money to work for future use.

EyeRytStuf said...

Another important difference between the two:

When played so that the higher-scoring letters land on a double-letter score square and some other part of the word is on a triple-word score square, GAMBLING is worth 14 points, and INVESTING is worth 17.

However, you only need one letter already on the board for GAMBLING, wheras you'd either have to build INVESTING on a word already on the board (IN, VEST, TIN, STING, etc.) or get the unlikely situation of two words with seven spaces between them and an I and a G lined up just right.

BruceA said...

The difference, I think, is that gambling is addictive. Addictions take away our self control.

That said, it is possible to gamble in the stock market. If you invest in a random company based on a "hot tip" or just a hunch, that may be no better than spending the day at the slot machine. Trying to time the market, trading in and out of stocks in the hopes of turning small gains into a small fortune, is also a form of gambling.

Long term investing, on the other hand, means supplying the capital a company needs to provide its goods or services. This will usually yield a return for the investor, but even if it doesn't it may be a responsible thing to do if the company provides some benefit to society.

shoes said...

I've just passing by when i found your site and its quite very interesting. I enjoy well while i read the articles. I want to share something Online Casino Reviews Locate Free Online Casinos and Gambling Guide Information @ online casino review pages. This is one of the best casino site I've ever seen.

EyeRytStuf said...

The guy who forgot to multiply his words by the triple-word score square (thus GAMBLING = 42 points and INVESTING = 51 points) thinks this "shoes" character isn't on the up-and-up.

Kansas Bob said...

The difference between the two is risk. Many people gamble with stocks and call it "investing". I think that investing looks at long term returns and while gambling focuses on short term rewards.

For me, investing has put me in a position where I could retire from corporate America in my fifties and be free to pursue ministry opportunities.

Steve J. said...

The difference between the two is that finance spambots take a lot longer to search out your comments page.

SteveH said...

Wesley said make all you can, save all you can, give all you can. The assumption with gambling is you will lose. The assumption with investing is you will (eventually) gain. Come to think of it, life is a gamble.

EyeRytStuf said...

On the serious tip, maybe it's just a traditional difference, that really has no basis is anything of importance.

Like how not cussing & not saying "ain't" was yet another way for the upper class to distinguish itself from the lower class in Victorian England, but eventually it came to be considered "wrong" to do these things.

Just a guess on my part. I am not a history person. I wouldn't know, if this was the case, when gambling became "bad" and investing didn't. And I'm not even saying it happened. I'm just theorizing here.

Anonymous said...

I was thinking about this some more last night and remembered an incident that happened at my church several years back.

Our church was having a Fall Festival and one of the events was a cake walk. Since it was a fundraiser for one of the groups within the church it cost something between .25 and $1 to participate. As with typical cake walks, the winner of each round won a cake. Well, we had a seminary student (one of many) attending our church who tried to follow the BOD to a "t" and he was not comfortable with the cake walk claiming it consituted gambling.

Finally, a compromise was reached - the winner got a whole cake and each participant got a piece. It still seems like gambling to me based on the way he was wanting to define gambling, but I suppose he found a grayish enough area that made him accept the idea of a cake walk.

I've always been perplexed by this situation and how it played out.

Anonymous said...

I don't see a huge difference between gambling and investing on the stock exchange or forex market. They both involve risk.

Anonymous said...

My thoughts...

Gambling - tied to a specific date/time when the 'results' are out

Investment - not tied to a specific date/time. If you "invest" in such a way, you may be actually gambling.