Gambling vs Stocks: ❤️ the game of trading

It’s not actually gambling, but it has a lot of similarities.

In reality, it’s risk-taking.

The major difference is, with gambling (ie: casino, races, sports, etc) you’re guaranteed to lose if you keep playing the same game, whereas with risk-taking you’re guaranteed to win if you keep playing the same game (as long as you are playing the odds correctly).

With gambling you are enticed to keep playing a losing game, as you lose slowly (with exciting wins along the way), and there is little to no decision-making involved. This makes it very comfortable to keep gambling even tho you are losing.

With risk-taking, you are traumatized into abandoning a winning strategy, as you can lose a bunch of trades very quickly and there is far too much contradictory information which makes decision-making very difficult. This combination, combined with the uncertainty of future price action, makes trading extremely traumatizing. Seeing as our brains are hardwired to avoid anything that has traumatized us in the past, a strategy that has a bad losing streak (which every strategy will do from time to time) will soon become to emotionally toxic to follow correctly.

What’s the cure for this nightmare, you might be asking?

Warren Buffett sees it as one big game, where money is only there to keep score. He then focuses on not losing money. This combination of attitudes takes the trauma out of it, which then allows him to play a consistent game.

The challenge after that is to stop yourself from getting lost in the dreams of wealth, and keeping your life working happily without wanting (feeling like you need) more money to spend. Because, as soon as you start wanting to spend more money, your physiology will fire up and you’ll become exposed to traumatic emotions once again, which will completely derail your trading.

So, the way is to not want to be richer than you are now. But, if you had that level of emotional maturity already, you never would have gotten into trading in the first place.

So, the most important lesson to learn from Buffett is to play a game that you love more than money, and let the money come naturally when it wants to.

I’m not saying ‘anyone can pull a $300 million a week dividend check like Buttett does’, but trading can be a lot more enjoyable, with some nice upside surprises along the way.