Poker Player or Gambler

[Stu_Ungar]

Ironically whilst there is risk in the stock marker, there is no uncertainty at the point of transaction.

At the point you buy shares you know the exact valise of the shares.. it is the price you pay for them.

Again, when selling the exact price is know, it is the price that they are sold for.

The uncertainty occurs during the time after you take legal ownership of the shares and continues until the point of sale (when ownership is transferred).

As ownership is of a comodity changes hands, the money forms part of a transaction and is therefore not wagered at any point.

Do you see the difference?

Since gambling is defined as the act of wagering money or goods for gain in a game of chance.

All three points must be addressed.

Poker indeed covers all three points.

Roulete also covers all three points.

The stock market fails to meet the criteria of wagering. It is also difficult to class the act of trading shares as a 'game of chance'

If you are looking for a corporate parallel you would do better to look at something like Insurance Underwriting.

Money is offered by a firms underwriters as colateral, so it incoperates wagering.

This money is wagered in return for an anual income. (they only ever have to pay out if the firm's own assets fail to cover its losses).

A firm only ever turns to its underwriters if financial disatser occurs. This means that an insurance firm expects a certain level of payouts and is in a position to pay them. So there is an element of chance as to whether or not the underwriter will be called upon to settle a debt.

It falls short of being classed as a game but overall the parallels between insurance underwriting and poker are far stronger than that of trading stocks and shares where no money is held as collateral.

 

[Stu_Ungar]

All life involves dealing with chance, but not all life involves gambling. Gambling, in my definition, is trying to gain by doing nothing more than getting lucky. There is no skill involved, just guessing. I know that's not the common definition, but that's how I deal with the moral question.

That may be your definition, but the actual definition requires a wager, the prospect of gain and a game of chance.

You work in the financial market.. you should understand that words have a specific meaning which are not up for negotiation.

If someone sells you a future and it turns out to be a derivative, the definition and implication of the word fraud is explained by a judge in no uncertain terms.

 

[GCB]

Can you please point out the point where the stock trader WAGERS money.

Sure. As soon as a trader buys a stock, his money is at risk. He is betting the stock will go up. But he can never be certain it will. He could lose some of it or all of it. That's a wager, or a bet. Traders use the term bet all the time.

Here's an example:

You look at a chart of XYZ stock and notice it's been moving up consistently. On the premise that it has momentum and should continue up, you buy 1000 shares at $50 per share and place a $1 stop loss. You plan to sell at $55.

You are betting $1000 to make $5000. If the stock goes up to your target, you win the bet. If it hits your stop, you lose. But you cannot be certain when you enter the trade which will happen.

Now there could be a lot of reasons to buy XYZ, and some are better than others. Thus skill comes into play. But however good your reason to buy it, you can never be sure that the trade will profit. So it's really a bet. Hopefully an educated one.

The same thing happens in poker. Unless you have the nuts, you can never be completely certain whether things will work out for you in a hand. All you can do is play the odds.

 

[GCB]

Ironically whilst there is risk in the stock marker, there is no uncertainty at the point of transaction.

At the point you buy shares you know the exact valise of the shares.. it is the price you pay for them.

Again, when selling the exact price is know, it is the price that they are sold for.

The uncertainty occurs during the time after you take legal ownership of the shares and continues until the point of sale (when ownership is transferred).

As ownership is of a comodity changes hands, the money forms part of a transaction and is therefore not wagered at any point.

Do you see the difference?

Not really, because the trader buys the instrument with the specific intent to profit or at least not lose from the transaction. He doesn't enter it to keep the thing he buys forever. So when he enters the transaction his money is at risk. The price could theoretically drop dramatically immediately after he enters into it.

Also, unless a trader enters a limit order, he doesn't exactly know the price he will get. If he enteres a market order he knows he will get a fill, but not a specific price. If he enters a limit order, he knows he will get a price, but not necessarily a fill. So there is risk even there.


When the trader enters a trade, in exchange he gets a chance to profit from the changing price of the instrument. That is what he is buying.

When a poker player bets on a hand, in exchange he gets an opportunity to profit from the outcome of the hand. That is what he is buying.

I really don't see much difference in principle.

 

[Stu_Ungar]

Sure. As soon as a trader buys a stock, his money is at risk. He is betting the stock will go up. But he can never be certain it will. He could lose some of it or all of it. That's a wager, or a bet. Traders use the term bet all the time.

Ill just stop you there.

Money has not been wagered in the above situation.

No bet has been made.

wager =/= buy or sell

bet =/= buy or sell

 

[Stu_Ungar]

Not really, because the trader buys the instrument with the specific intent to profit or at least not lose from the transaction. He doesn't enter it to keep the thing he buys forever. So when he enters the transaction his money is at risk. The price could theoretically drop dramatically immediately after he enters into it.

Also, unless a trader enters a limit order, he doesn't exactly know the price he will get. If he enteres a market order he knows he will get a fill, but not a specific price. If he enters a limit order, he knows he will get a price, but not necessarily a fill. So there is risk even there.


When the trader enters a trade, in exchange he gets a chance to profit from the changing price of the instrument. That is what he is buying.

When a poker player bets on a hand, in exchange he gets an opportunity to profit from the outcome of the hand. That is what he is buying.

I really don't see much difference in principle.

I have just highlighted the key words in your explaination which show the difference between a transaction and a wager.

 

[GCB]

That may be your definition, but the actual definition requires a wager, the prospect of gain and a game of chance.

You work in the financial market.. you should understand that words have a specific meaning which are not up for negotiation.

If someone sells you a future and it turns out to be a derivative, the definition and implication of the word fraud is explained by a judge in no uncertain terms.

I'm also a writer, so I understand that words mean things. I just disagree somewhat with your definition of wagering. And I think my connotation of gambling captures the essense of the issue with the word.

But we're here to learn from each other right? Not to prove others wrong. Surely you see some value in the points I've made. As I've in yours.

 

[GCB]

Ill just stop you there.

Money has not been wagered in the above situation.

No bet has been made.

wager =/= buy or sell

bet =/= buy or sell

If you enter the transaction with the intent of making a profit from a price change, then in principle it's a bet.

If you buy the stock to paper your walls with the certificates, then its another matter. Unless your wife might not like that, then it is a risk, hence a wager.

 

[Stu_Ungar]

If you enter the transaction with the intent of making a profit from a price change, then in principle it's a bet.

If you buy the stock to paper your walls with the certificates, then its another matter, unless your wife might not like that, then it is a risk, hence a wager.

Then please explain how a person can both own something and also offer money as collateral against it.

In a bet, money is wagered (offered as collateral) against the outcome of an event.

When a transaction occurs a person offers money in return for the transfer of ownership.

A bet has no transfer of ownership.

A transaction has no wager.

 

[TinaPete]

Very good question. I would rather be a good poker player any day, but sometimes you need to gamble, like in a tourney when blinds and antes are going up. good luck at the tables.......... Tina

 

[TinaPete]

Very good question. I would rather be a good poker player any day, but sometimes you need to gamble, like in a tourney when blinds and antes are going up. good luck at the tables.......... Tina

 

[PurgatoryD]

I think at this point we have to make sure we're not just arguing about terminology. I will grant you, the term "wager" is not used in the stock market. Likewise, the phrase "purchase some shares" is not used when buying in at a poker table. If that's all this is about, then we can leave it at that. Those are commonplace usages and definitions that are not in dispute.

However, if we're arguing about the underlying activities -- regardless of any names that anyone uses to describe them -- then things are not so clear.

You transfer legal ownership of a commodity. When you gamble, you wager money on the outcome of an uncertain event.

Some companies sell stocks as a way to raise capital so that they can continue new research and development, for instance. If things go over budget, and the ideas never come to fruition, you never really own anything. You owned a piece of potential future gains which never materialized. Furthermore, you may not even have rights to any of the company's assets to offset your losses as the bondholders will be in line in front of you. Their "investment" (or "wager") was less risky than yours, and thus they will be paid before you. The outcome was definitely uncertain. And you "invested in" or "wagered on" that outcome.

Likewise, when an accomplished poker player who has education, training and ability to outwit other players "invests in" a tournament or bankroll, while the outcome of any single event is definitely not certain, over time he makes money.

Lets compare that with someone who plays the slot machine. Over time, the outcome is certain as well, although much different: money will be lost. No amount of skill and/or training can change that.

Definitions aside, it looks like (1) poker for an accomplished player over time is a certain gain of money, (2) playing the stock market over time is a chance to gain or lose money, and (3) pulling a slot machine over time is a certain loss of money. Regardless of which specific terminology we use for the three activities, this is the essence of what's going on, isn't it?

-Dave

 

[GCB]

Then please explain how a person can both own something and also offer money as collateral against it.

In a bet, money is wagered (offered as collateral) against the outcome of an event.

When a transaction occurs a person offers money in return for the transfer of ownership.

A bet has no transfer of ownership.

A transaction has no wager.

The best example is a futures contract. A futures contract is contract to be able to buy a particular commodity in the future at a particular price. The contract itself has no intrinsic value. It's value is whatever the market says it is. Without the market giving it a price, it is worthless. (Unlike something like a house, which the market may say isn't worth much, but which you can still live in or use for firewood.)

Every future contract involves two parties, a buyer and a seller. There is always both. The buyer acquires the right and the obligation to buy the underlying commodity (say the DOW index) at whatever the contract price was when he buys. So he wants the price to go up.

The seller acquires the right and the obligation to sell the underlying commodity at that same contract price. So he wants the price to go down.

So let's say Joe and Sam enter into a Dow mini futures contract. Joe buys one contract, which Same sells. Now, for every 1 point the Dow mini price changes, $5 effectively leaves one party's account and goes into the other's in real time. If the Dow goes up, Joe gains and Sam loses. If it goes down, Sam gains and Joe loses. For every Sam there is a Joe. Neither can enter a contract without the other. Futures trading is a zero-sum game, for all winners there is an equivalence of losers.


Now forget futures for a moment. Simply suppose Joe and Sam enter into an agreement which has the following rules: Joe agrees to pay Sam $5 for each point the Dow goes down, if Sam pays him $5 per point for every time it goes up. They are obligated to the contract until either an agreed on expiration date or until one or both of them sells their side of the agreement to someone else.

Now, can you call what they've to a wager? Of course. If Joe is right he gets Sam's money, and vice versa. Usually you don't see wagers pay off in real time as this one does. But there is no reason they can't.

But the wager they have entered into is almost exactly the same thing as a futures contract. And it certainly is exactly the way futures contracts are used 98% of the time.

Traders offer their money as collateral in order to enter into these contracts in which they can profit from the movement of the market, just like, as you said, a poker player offers his money as collateral in order to enter into poker hands and profit from their outcomes.

 

[Exit141RTe1]

I think I like the Poker Player name best, and, that being said I would like to think always making the right decision. If you think of the odds you should come out ahead more ofter than most when your are the favorite.

Then again, lets gamble!

 

[PurgatoryD]

If Joe is right he gets Sam's money, and vice versa

And no matter who wins or loses, the brokerage house always collects the rake. I mean, their "fee".

Great example, by the way!

-Dave

 

[Stu_Ungar]

I think it all boils down to cabbage rabbits under a type of brittled fundamental fridge.

I can see the appeal of not sticking to the standard dictionary definitions.

It allows far more scope.

Even when I say hidden montage of guided violins, I think the message is still clear.

I like this new approach to communication, bend the meaning of a words to whatever suits your needs and assume that everyone else will fathom your intended meaning.

This is a plastic idea!! I shall elephant it more often.

 

[GCB]

I understand Stu's frustration with the language thing. But just to be clear, I'm not hung up on redefining the word "gamble."

I just believe that the reason society has a problem with gambling in general is not because of its basic definition, which is "seeking to profit from uncertain outcomes." Because let's face it. 99.99% of outcomes are "uncertain." How many things happened to you today that you really didn't expect. Case closed.

No, the reason society has a problem with this thing we call "gambling" is the perception that there is no skill involved, but rather it is simply trying to get rich by getting lucky. Stu is right, the word gambling does not have this denotation, but it definitely has this connotation.

And personally, I think morally speaking trying to profit soley by getting lucky is a bit suspect.

But here's the thing, anyone who tries to win at poker or the financial markets simply by throwing darts is guaranteed to lose in the long run. That is, anyone who gambles at either one like they play the lottery will lose. Skill is required. Thank goodness. Who wants to depend strictly on fate or pure guesswork? That would be both boring and disempowering.

 

[PurgatoryD]

I think at this point we have to make sure we're not just arguing about terminology. . . . If that's all this is about, then we can leave it at that.

I think it all boils down to cabbage rabbits under a type of brittled fundamental fridge.

LOL! OK, that's what I thought.

I like this new approach to communication, bend the meaning of a words to whatever suits your needs and assume that everyone else will fathom your intended meaning.

It was never about bending the meaning of words. It was about getting to an underlying idea. You can call it a goose or a gander. You can even talk about the differences in each. But they both have feathers, even if society decides to call one a horse.

Some time ago, people referred to a Credit Default Swap (CDS) as an insurance tool in order to hedge losses. So they called it "insurance" instead of a "house of cards". You can call it whatever you want. In the end, the entire premise was completely flawed and the whole thing fell apart. When people later actually looked at what was going on, they realized that it could never have worked. Thus, it never really was "insurance". Yet we called it that. No one was bending language. They were simply coming to terms with how the entity was very different than accepted language implied.

That's all I was pointing out with the "wagering" vs "investing" accepted definitions. So let's just let the public define what is a "game of chance" and what is a "game of skill" and we'll just play poker, regardless of what it is or is not to the general public.

Good discussion, though.

-Dave

 

[PurgatoryD]

That would be both boring and disempowering.

Amen to that! I want to control the action. I want to be able to improve my game. Gambling doesn't let me do that.

Good chatting with you!

-Dave

 

[dmorris68]

I think with all the semantic bickering about literal definitions of words, this thread has lost sight of the spirit of the question, which I think (hope?) is clear to us all. It's pretty obvious what the OP was getting at, so I'm not sure why we have to spend most of 98 posts up to this point arguing about the technically accurate but mostly irrelevant (for the intended context) semantic differences...

 

[cardplayer52]

I picked A. And with G-bucks you never lose in that spot ever.

 

[NBA2K10ROCKETS]

well i think that the difference between a poker player and a gambler is that gamblers dont have any influence on the outcome and poker players have choices to chance the outcome so basically poker player require skills and gamblers require nothing but luck and bravery.

 

[GCB]

Amen to that! I want to control the action. I want to be able to improve my game. Gambling doesn't let me do that.

Good chatting with you!

-Dave

Me too.

 

[brandonnj]

Ill just stop you there.

Money has not been wagered in the above situation.

No bet has been made.

wager =/= buy or sell

bet =/= buy or sell

Lol, Stu already won it, you cant deny that ^