A Letter To Barack Obama

A definition of gamble in the Oxford dictionary is 'to take a chance on; venture; risk'. This seems quite appropriate when talking about the stock market. I used to work for a well known financial company and saw numerous people who had lost their savings through 'taking a chance' on stocks and shares. Are you saying that there is no 'risk' on the stock market? If that is the case then I shall invest today.

SheyylLouise is correct, whatever the dictionary definition is most people would accept that to seek returns greater than available on a deposit that is guaranteed by the Government is a risk. To take a risk, in anyone's language, is a gamble. For a Government to do it must certainly be so, as the sums involved are so great they would totally dominate the market.

I don't know how many pensioners there are in the US or what level the Social Security pensions are set at, but taking UK figures of a pension of c.£4,700pa and c.17million people (per recent ONS figures, however reliable they may be) life expectancy of 20years from retirement and inflation of 3% the figure required to "fully fund" the state retirement benefit scheme (excluding SERPs/S2P and Graduated pension) would be at least £1.3trillion or one whole years GDP. As at yesterdays close the market capitalisation of all UK listed stocks was £1.623trillion. Of course no prudent manager would invest solely in one market or asset class, but you do get some idea of the sums involved and that they would create a momentum all of their own.

In summary, in my opinion, not only are the authors mistaken in their premise that "investing" in the stock market is not a "gamble," but for a Government to do so would create a false market all of its own.

As someone who once worked in the City, I would have to agree with one part of the letter's premise - namely that it is possible through doing some thorough research to identify companies which have a *greater likelihood* of increasing their share value over the mid to long term. However, I also have to point out that there is a bigger issue at stake, namely that of timing. When you plan to retire, you have a pretty accurate idea of when that is to happen. Unfortunately, the stock market does not rise steadily and consistently. This means that you cannot guarantee that the value of your investments will be at a suitable level on the day you wish to cash them in.
More worryingly, the reasons behind sudden and dramatic movements in the markets are usually emotional reactions, and these can be triggered by all manner of unpredictable events; witness the drop in market values this week triggered by our Chancellor's comments at the weekend.
Why do very few traders consistently make millions? Because the way that the stock market operates means that there are too many trades being made by people looking for short term gains. Their actions skew the price of shares and it's a fundamental flaw.
The bottom line is that there is always an element of gambling when investing in the stock market.

"any person can be an investor who has the time and the temperament...." More Americans have increased their play on the stock market, but the majority have little interest or inclination or know-how to risk a "roll of the dice" (avoid the work 'gamble')The companies tht hold my pension have been vetted thoroughly by my company's administrators. I did nothing because I was interested only in whether or not I would have a pension. One month before my retirement, I attended several seminars which explained choices and processes. There was certainty, there were guarantees, and there was security and there was tradition. I don't think we can say that about the stock market.

ps Timing is important also,ie,when you wish to retire and how the market is doing at the time.

This begs the question what constitutes investing and what constitutes speculating and the whole spectrum in between. In the short term prices bounce around but over 10 years+ the volatility evens out and trends upwards. Investing therefore has to be long term otherwise you are at the whim of the market. Other characteristics of investing are only putting at risk capital you can afford to lose, investing on value measures like PE, diversification of sectors, established businesses and generating an income which can potentially be reinvested.

I could research the form of every horse in a race; thoroughly check their antecedents; examine their management - and still lose my money.

Rewards for innovation and increased efficiency flow to the risk takers or equity investors. What other investment class brings such benefits? If anyone knows, please say.

Longer term, for the above reason, unless capitalism has failed completely, an investor should have some exposure to the stock market, especially when considering a pension asset.

What is this article supposed to do?

Create a discussion on the definition of the word "gambling"? Support the (political) position that pensions should be linked to the stock market?
Stimulate us readers to invest (more?) in the stock markets as they are a sure thing and not subject to so many affecting factors that their future gains and losses can only be measured in probability?

At best, the article is nothing but McCain propaganda.

Your anticipated quote from Warren buffett says it all "If you asked him how he did that, he might reply humbly that he had been lucky" - case closed!

I think life is a gamble. Don't forget when you get into bed at night you might not get out alive!

Risk and gamble are part of the same family, it is a matter of degree. Risk is an assessment of likelihood and consequence, gamble usually lacks an objecgive assessment. The media drives politicians to promise complete safety, which of course is not possible. Even staying in bed is not safe, statistically, as ben7fit observes. I agree with the tenor of the Fool article; Barack Obama is either being disingenuous or more worryingly, and I fear closer to the truth, really does not understand how the economy functions.