Gamble on the Melbourne Cup, not the stock market

Make sure you leave your gambling hat at the races today, not the share market

| More on:
a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

sdf

With this year's Melbourne Cup just kicking off, the race that stops the nation will no doubt have all eyes on the track. Not only is the Cup a great chance for Australians to come together (either on the racetrack or the barbeque), it also happens to be the largest betting day of the year.

Not much of a gambler myself, I still understand the simple joy of placing a bet on a horse you've never met – knowing you might lose, but hoping you win regardless.

But today is also a good time to remind ourselves that gambling belongs on the racetrack or at the casino, not on the share market.

Many people who don't follow investing or see no interest in stocks might tell you that shares in general are just another form of gambling – but this could not be further from the truth.

Most things in life and finance come with risk, and this is no different with shares.

Shares at a basic level represent individual parts of a business – a 'share' of the company's profits (or losses).

You are risking your money on a short-term basis for sure – no one knows what the share market will do tomorrow or the next day, and you might be confronted with a loss on paper the morning after you make your first investment.

But if you adopt a long-term mindset, the idea of gambling with shares goes out the window. Does anyone seriously think Apple, Microsoft or Commonwealth Bank of Australia (ASX: CBA) won't be around in 10 years' time? There's a small chance they might be worth less, but I would wager there's almost a zero chance you will lose all of your money on these companies – that's pretty good odds.

Foolish takeaway

If you want to trade penny stocks, back exploratory miners or buy into upstart biotech or pharmaceutical companies, by all means, go for it.

Just know that you're really gambling with these kinds of stocks. Make sure you tell your friends and family what you're doing as well as well, it's best not to put the wrong ideas about shares out there.

Long-term investors like us Fools – we like to buy businesses, not race tickets (most of the year).

Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Share Market News

A man in a suit face palms at the downturn happening with shares today.
Share Market News

These are the 10 most shorted ASX shares

Let's see which shares short sellers are targeting this week.

Read more »

Workers at the port joyfully jump high in the air with shipping containers in the background.
Industrials Shares

$10,000 invested in Austal shares a year ago is now worth…

Austal is an Australian shipbuilding company founded in 1988 that builds ships for the US Navy.

Read more »

a man in a green and gold Australian athletic kit roars ecstatically with a wide open mouth while his hands are clenched and raised as a shower of gold confetti falls in the sky around him.
Broker Notes

5 Australian shares to buy with $5,000

Brokers are urging investors to snap up these shares right now.

Read more »

A male ASX 200 broker wearing a blue shirt and black tie holds one hand to his chin with the other arm crossed across his body as he watches stock prices on a digital screen while deep in thought
Share Market News

5 things to watch on the ASX 200 on Monday

Let's see what is expected on the local market today.

Read more »

Broker Notes

Broker warns regulated electricity could threaten AGL shares 

What could the government review mean for utility stocks?

Read more »

An oil worker assesses productivity at an oil rig as ASX 200 energy shares continue to rise.
Share Market News

ASX 200 energy shares lead for the second week as world awaits US decision on Iran

ASX energy shares lifted 5.31% while the ASX 200 fell 0.49% amid the US President contemplating strikes.

Read more »

Two brokers analysing stocks.
Broker Notes

Top brokers name 3 ASX shares to buy next week

Brokers gave buy ratings to these ASX shares last week. Why are they bullish?

Read more »

A young well-dressed couple at a luxury resort celebrate successful life choices.
Broker Notes

These ASX 200 shares could rise 40% to 50%

Analysts at Macquarie see potential for these shares to deliver the goods for investors.

Read more »