In this article, we see chapter 3 of One Up On Wall Street book. This chapter is all about Is this Gambling or what?. So let’s understand step by step chapter 3.
Is This Gambling or What?:
So many people say about the stock market is gambling. But they telling on their different way. When the market is in a bullish position, they called Investment. And when the market is bearish then people called Gambling.
In 1927, if you want to invest 1000 dollars, you have so many ways. so let’s start with Fix deposits. When you are investing 1000 dollars that increase by 7.5%. (One Up On Wall Street: Chapter 3)
And if you invest that money in government bonds, it gives 13.5%. And if you invest that money in a corporate bond, it gives 17.2%. And if you invest that money in common stock, it gives 272%. In that so many stock market crash, depression comes and go and so many recession come and go. After this stuff common stock gives a return on investment is about 272 times in 7 years. so let’s understand. Why stocks are investments.
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Why stocks are an investment:-One Up On Wall Street: Chapter 3
In your lifetime, you need only 6 stocks out of 10 stocks to successful. so let’s understand the power of common stocks.
- In stock, you are an owner in a prosperous and expanding business. so you get benefits and stock prices to increase hugely. But bonds can’t make money as compare to stock.
- In bonds, you are no more than the nearest source of spare change. Bond is like to take spare and sometimes one more dollar.(One Up On Wall Street: Chapter 3)
- So there is no big company that is impossible to fail. you can’t say there is one blue ship’s stock or good company is not fail. If this is not happening, and you buy good company stock at a good price. you lose the value of that investment. So in that time, people say the stock is the gambling position and when stock increases are people called investment.
- The stock market is like a stud poker game. As you go long as cards suggest favorable odds of success. and then you hold.(One Up On Wall Street: Chapter 3)
So the stock market is Gambling or investment is all about the investor mindset. If you have the knowledge of investment and company analysis then you make a good investment in a bad stock price company.
This is all about chapter 3 of One Up On Wall Street book.
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