We’ve written before about how the stock market is not a casino, and in light of recent remarkable events, other professionals are reminding the public too.
What had been a $4 stock recently ran up to over $400. Although we heard a hundred different ideas about what the episode meant, we can almost certainly understand that no, the company did not actually become a hundred times more valuable.
We do not know the future, so I can’t tell you that buying after it made headlines is going to turn out poorly, but (in my opinion) you’d have far better odds at an actual casino.
Let’s think about that for a second. Have you ever put a little money on something that had the chance to turn out really big? A long shot at the race track, a chance on a huge lottery payout, or stock in a company that might make a lot of money if it doesn’t go broke?
Our business in here is sound investing, not gambling or speculating, though I myself have considered the odds and laid my money down a time or two.
But this recent example buzzing in the news isn’t like that. It’s one of these situations where lots of people get caught up in something that has the same practical meaning as flushing money down the toilet.
It would be better to invest wisely, spend well, and plan for the long haul. For some, chasing those big chances can be fun in moderation. But we don’t advise it become a daily activity.
Jumping into something with even worse odds than those big chances? We wouldn’t count on anything longer than a long shot.
Clients, when you have questions or concerns, please reach out.
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