Why do we Gamble - I

Trading is not Gambling.......

But it's first cousin!

Afterall,

Money won is twice as sweet as money earned! (from the movie "The Color of Money")

According to Thomas Zentall, professor of psychology at University of Kentucky in Lexington

"....there may be a fundamental biological reason for gambling rather than..........the idea that gambling is practiced because it is enjoyable and entertaining."

We don't know those "biological" reasons but are relieved to know that there exist some!

We can therefore, continue trading without feeling guilty (or atleast without being conscious) that we are doing something which tastes like gambling but has a different and better name!

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But the interesting question is why do we gamble (or trade)?

Basically, those who gamble (less or more) broadly fall into six types.

1) First types are those who "know" they have been "left behind in life" and it hurts!

So, they want to "get it all" back......fast!

Such traders are hardworking restless traders who lose faster and are think seriously only while dressing their wounds!

("In a bet there is a fool and a thief. - Proverb")

2) Second types are those who "think" they have been left behind in life and it hurts but not that much!

So, they try hard and more

but not outright gamble!

Such traders have casual approach towards trading!

Occasionally they win, quite a few times they lose, but majority times they stay out due to fear!

3) Third types are those who "feel" that they have been "probably" left "out" in life

but it "doesn't seem to be hurting" them.

So, they keep doing their own sweet thing!

These are the people who irritate amateur traders by outperforming them thru mutual funds or long-term seemingly-dumb but highly profitable investments

despite not knowing anything beyond ABC of trading!

These third types tease the first two types to try harder and hence.............lose even more!

4) There is a strange fourth type who don't bother whether they have been "left behind" or "moved ahead".

They don't even acknowledge that any race is taking place!

They simply stay out of "everything".

Do they become extinct?

No.

Do they become out-dated?

Yes.

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5 & 6) If you think only the left-behinds gamble, then hold your thoughts.

Even those who have "zoomed ahead" also gamble

(whereas even a laid-back approach would have rained them enough money to use it even as fuel for their chimneys!)

These fifth ones gamble to get entertainment.

And the sixth ones gamble due to bouts of carelessness!

The examples of the sixth ones are the Tatas who bought Land Rover - Jaguar as well as Chorus at ridiculous price!

or the L&T which bought big chunks of the crumbling Satyam like a child in a hurry!

They remind me of a famous saying by VP Pappy

"If you ain't just a little scared when you enter a casino, you are either very rich or you haven't studied the games enough."

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Moral of the story?

If you can't avoid it, atleast understand it!

If you must play, decide upon three things at the start: the rules of the game, the stakes, and the quitting time. - Chinese Proverb