When is football betting investing?

And when is investing gambling?

Hi friend,

This week I am in Copenhagen visiting my dad and attending the Copenhell festival.

Yesterday I went to pick up the festival wristband and catch up with a good friend of mine in the process. Over a couple of beers we also covered investing and in his case betting, particularly related to football since the European Football Championship is happening these days. My friend has been into football for decades and regularly places bets while also being an investor in both stock and crypto markets.

I’m sure you have heard people saying that investing is gambling.

Have you ever heard anyone saying that betting can be investing?

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Now, before we get too far into this let me reiterate that no matter your favorite flavor of putting your money at risk, always invest, never gamble!

Imagine having found a business you want to invest in where you understand their industry really well.

The business operates in a high-competition environment and you can see that with each earnings report there is never a guarantee how the market will respond to the performance. Some quarters result in the price climbing higher, some quarters come with setbacks. This makes the business a nonprofitable flat-liner in the long term.

Yet, you found out that with your knowledge, somehow you are able to predict when events make the price climb and when it makes the price fall.

So you enter and exit positions in this stock regularly.

This is pretty common in the stock market.

Is it gambling?

A bystander could say so, but you would say otherwise and point to your track record of reliable predictions.

So you agree with the bystander that it is educated guesses and he probably just thinks you are lucky, while you know better.

Now, for a thought exercise, imagine that it is not a business, but a soccer team.

You used to play semi-professionally and have been deeply interested in and following the sport for decades.

You know the teams, the players, and particularly the surrounding business and media environment and how all these affect each other even at subconscious levels for everyone involved.

Most matches are unpredictable, but a great deal of them you just know how they will turn out.

So you place bets and you keep winning when you do.

Is this gambling?

Everyone would say hell yes.

I say it depends on your knowledge and your execution skills.

Knowing when to put your money at risk and when to keep it safe, never spending more than you can afford to lose.

A person buying NVDA stock on hunch and hype and hoping it keeps climbing is not much different than a person placing bets on his favorite team.

A person betting on a team in a particular favorable match based on extensive knowledge can get quite similar to a person “betting” NVDA will keep rising because of deep knowledge and experience in the tech industry.

Personally, I have never been into following sports and I have always had a principle that I do not gamble.

Yesterday made me think and I thought it would be fun to share with you.

What do you think?

When are you investing and when are you gambling really?

Have fun and make profits,

Chris

Thank you for reading! :)

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DISCLAIMER: None of this is financial advice. This letter is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. Please be careful and do your own research.