R C Macaulay wrote: > > Howdy Mark, > Considering the stock market is a legal form of gambling,
Big difference: Over the last 40 years or so the expected return of the stock market has been positive. The expected return of a slot machine is *always* negative. There is a large difference between a risky investment and casino gambling: The former may very well have positive expectation, despite the risk. In the casino the house intentionally tries to assure you will lose. When you buy stock, the guys running the company whose stock you buy -- the "house" -- typically want the stock to go up in value, which means they are trying to assure you will *win*. (They don't always manage it, of course.) Shares in an "index fund" based on a representative sample of stocks in the stock market have usually returned reasonable rates. Conversely, if you could set up an "index fund" based on the return of money invested in a representative sample of slot machines it would *always* go down in value, and would never provide even a break-even rate of return. There are no "good years" for slot machines. > I wonder why > these regs don't apply to the market. See above.
