Apparently, poker is considered gambling, despite the fact that it's proponents considered it skill based. I agree with the skill based evaluation. Certainly, a skilled player can make a living at it. Just like Blackjack players can make it, that is, assuming the Casinos would let them.
Speaking of gambling, state lotteries, such as PowerBall, is pure chance, with no skill involved. They even go so far as to change the balls frequently to prevent people from recognizing patterns in numbers. Not to mention the cut is 50%. Consider that Craps, Blackjacks, Roullettes, and other popular games features some of the lowest margins, you have to admit that rules prohibiting on-line gambling is simply a government decision to remove potential competitors.
However, I doubt that all those money will be plowed to state lotteries when there is a legitimate avenue for it: the stock market.
I know that some people insist that stock market requires highly developed talents and skills. Having analyzed the stock market, I agree. However, that doesn't mean that you can't approach it like a gambler would.
I mean, where else but in the finance industry can people get a lot of money, respect, and power simply by taking stock of all companies, sorting them by capitalization, and say: Here's how you can make a lot of money!
The amount of cut-off isn't even relevant. 30, 100, 500, 1000, 2000, 3000, 5000. Insert-Your-Name-Here Index promises to give you the most money for your retirement! Just see how much money you would have made had you started with it from March 9, 2009. You could have made a bundle! And if it has been going up so far, then imagine how much money you could be making 10 years from now! Just sign at the dotted line, please.
Just kidding. The title of this piece is gambling, and that's all it is. Yes, you can analyse stocks, but can you do better than monkey-with-dart stock investing? The proliferation of these indexes says that you can't. And thus, gambling.
So, knowing that it is gambling, how would you do it? Simple. Scan the prices on the newspaper. If it is mostly up, then buying a spread will most likely result in a gain. If it is mostly down, then buying a spread will most likely result in a loss. So far, that's just index. No rocket science there.
Let's improve this a bit more. Of all the stocks you buy, it can go up, down, or stay the same. Just ask any technicians. So, using the rules "keep the winners and sell the losers", we will hold those that rise in price. The rest, we will trim out. Simple. Eventually, all risers will top out. We will sell them then.
The proceeding money then will be used to buy more stocks, if conditions are favorable, or buy short term bonds if not. Re-evaluate when the bond matures. Simple. This will keep you out of the down market, let your winners ride, and cut off your losers.
You may wonder how to choose a stock spread. Remember, we are buying chance, not skill. So, not to put a fine point in it, tape the newspaper to the wall and throw darts at it. If you want to get fancy, you can use double blind shuffle technique, but any sufficiently random technique will work. I would number the stocks and pull playing cards out to see which stocks would get picked. It is just like the birthday lottery drafting process for the Vietnam War. Hey, if it is good enough for the competition-hating government, then it's good enough for me!
How is that different from Craps?