gambling and investing

If you gamble, the chances are you will lose. 

And if you invest the chances are you may not make money. 

I will be surprised if many people would disagree with these two statements ? But what is surprising is that too many people ignore the very simple rules and either gamble or make investments that they shouldn't. I am not qualified to make comments on the problems of "gambling" but I have been around long enough to see many clients make bad investment decisions, be it in shares or property.

When it comes to investing in shares, I am yet to meet anyone that has done so based on sound knowledge of the market. My experience is that most people buy shares based on recommendation from friends (mainly the brother-in-law) or mates at work.

IMPORTANT RULE - don't follow or accept tips from people that are not in the business. Share investing is a sophisticated game and there are many things you need to take into account about the company, its management, future plans etc before you can decide if it is a good share to buy.

Interestingly, before the Global Financial Crisis (GFC) share investments by ordinary Mums and Dads was at all time high. Why? because at the time the share market was a "feel good story" and generally most people like good stories. But when the crash took place they sold, took the losses and got out. Of course there was no need to panic and get out of the market - the market eventually did bounce back and most investors would have recovered any "paper losses" they may have incurred during the GFC. Remember! paper losses are just that - in paper.  

IMPORTANT RULE with all investment - you should buy low and sell high. Yet, what did most people do? they all bought high, just before the GFC and sold low after the GFC. So if you, like me, hear someone complain that they lost money on the share market - just ask them "did you follow Robert's rule of buying low and selling high? or did you do the opposite buy high and sell low"?.

Clients losing money is NOT because the share market is not  a good investment option!. Clients lose money because they don't know how to invest.

If you want to invest but don't know how - simply seek advice. Few dollars you will spend getting this initial advice can help make money in the future.