But, as you well know by now, I have to put my two cents in (which sometimes, is about what my opinion is worth!)

Investing and Gambling: I see your point there, but most experienced investors also know how to “hedge” their bets. Typically, the market runs on seven year cycles, so you can find yourself short on value every seven years. If you are planning on retiring within the next seven years, you shouldn’t be gambling with your money anyway. If you are young, feel free to invest in some of the higher return, but riskier stocks or funds. As we age, put more of it in safer markets and keep the income you have already accumulated.

Debt should not be a bad word, but if you want, you can say a few bad works about mis-managed or uncontrolled debt.

Debt makes many things possible. Paying cash is good. Using a credit card that has 12 months no interest is a 1 year free loan. Free money that is other people’s money is always better than my cash. Paying 8.9 or 9.9% interest on a business card and collecting 18% on accounts receiveable, means payroll is never an issue. Usually, that card gets paid in full and no interest is paid, but just in case, employees won’t lynch you because they didn’t get a check just because most of your customers didn’t pay their bill one month.

Sacrifice: If one is managing debt properly, there is no sacrifice: You still have the cash because you charged your purchases, if you pay them off in 30 days, there is no interest, and you still have the cash capital to use to operate your business, your home, or whatever. Should the worse happen, then you have cash for the emergency and pay a little interest next month, but you don’t have to cash in investments or look for a short-term loan.

Finally, Professionals: Professional what? (sorry, couldn’t pass that one up)

If you invest millions or billions, then feel free to hire one. How much are you going to pay for that same advice for a $4,000 investment? If you need, sit down with an financial manager and pay him/her several hundred dollars to evaluate your present situation and provide some one-time advice. Then, start managing your money like it is money! But, if someone needs constant advice on each investment, then one is throwing away alot of returns for that advice. Do your homework and study each stock, bond, fund before you buy and you will be much better off.

Something as simple as a company going out of business or a stock market crash or terrorism, there’s always an unknown, which is where the math in economics/finance is lacking.

The key is the phrase “over time.” If there were a stock market crash tomorrow, just about everything I have saved for retirement would drop to zero. But that wouldn’t bother me in the least, because I’m 20 years away from retirement. If however I were planning to retire next week and the stock market crashed tomorrow, that would be a cause for concern

Strictly speaking nothing in the future is certain, not even the “guaranteed” interest you get from a savings account. Really all we have to go on is past trends, and for the stock market those trends tend to be upward over time, despite ups and downs. Inflation also tends to occur over time, which again isn’t totally predictable but is highly likely to continue. So if you want to beat inflation over the long term, diversified investing in the stock market is still the safest bet (and yes, it’s a bet), otherwise you’re not likely to earn enough to stay ahead of inflation.

prove it. investments may make money, it isn’t a sure thing. something as simple as a company going out of business or a stock market crash or terrorism, there’s always an unkown, which is where the math in economics/finance is lacking.

“No there aren’t, it’s impossible. where would the money come from?”

the cost of operating a casino, the cost of getting to the casiono. heck, the cost of buying the beers and getting the game on pay per view for your buddies. it’s all non-zero-sum when you take into account enoughn factors - again, this is where the math of finance and economics let’s us down, which is why there isn’t a mathematical sure-thing in investing.

“Do you really think there is a large chance that, if you had a regular mutual fund, that none of the firms in that fund would have any profit for an extended period of time, and no profit == no dividends??”
I think there’s a chance that i could lose every penny. is it probable? no. is it possible. yes.

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no way, if that was so, everyone would be making money
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Over time, investments will make money. there is no question about this. however, even with that as a “given”, not everybody will make money because short term needs always trump long term needs. that’s why investing is hard. money invested long term is lost in the short term, and short term needs differ for everyone.
As an example, if you need $1 to eat tomorrow, what difference does it make that in 1 year, that $1 will be worth $2?

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all based on probability and chance and money, which sounds like gambing to me, and most everyone thinks they have a
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No, gambling is “to stake on the outcome of something involving chance”. Did you miss the part that i said that investing was not zero-sum because of dividends?
Well, investing is “…spending or devote for future advantage”
Do you really think there is a large chance that, if you had a regular mutual fund, that none of the firms in that fund would have any profit for an extended period of time, and no profit == no dividends??

This is definitional, and you may find that pedantic, but the 2 words don’t mean the same thing.

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there are non zero-sums of gambling.
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No there aren’t, it’s impossible. where would the money come from? do you have a Fed printing press setup in the middle of the poker hand? Ok, fine, if you consider the rake, then gambling is non-zero sum.

on the other hand, if you know of a game that creates more money simply by playing, (without the need to add more players), then please let me know. i’d love to play.

Economics is similar to a scientific comparision between different planets, only it just changes more quickly, and is a self-correcting system based on risk measurements.

More basically, if the US becomes a relatively worse place to invest in the future than China, then money will funnel to China, and if the US investments want to compete, then the return rates will rise, which will shift rational people back to the US, and as investments return, the rates will fall. Day to day, is it easy to see where the money will go? No, but over time its pretty easy and very predictable.

gambling involves a zero sum closed loop redistribution of funds.

daytrading is gambling. in an average day, dividends and capital gains are not added to a stock so any gains are based on someone else’s (opportunity cost-based; doesn’t have to be net losses) individual losses.

long term investing is not zero sum. Dividends and capital gains are added to the system at regular intervals, so everyone *can* gain.

I just can’t shake the feeling that all the arguments about the financial markets are based on a limited circumstance and a limited timeframe that has happened to coincide with the period in history when the USA has been the strongest, wealthiest, most innovative country on the planet. “Past performance is not a guarantee of future returns” and I can’t help but feel that in our globalizing world the situation in 50 or 100 years may be very very different than it is today, or was 20 years ago.

Regardless of what Alfred Nobel might have thought, economics is *not* a science. People have come to believe that “market forces” are some sort of natural phenomenon on the same plane with gravity or some such. This is hogwash. It’s entirely a function of cultural constructs, and when those shift, markets and money can go completely haywire. Ask anyone associated with the Enron debacle. Ask anyone in Somalia right now.

In short–every single thing I read and hear about the stock market has a strong whiff of Conventional Wisdom about it. Purely backwards-looking and entirely lacking in predictive power. I’m supposed to trust my financial future to this?

#1 saving is easy. Investing may not be rocket science but it can be complicated (usually more complicated than it should be)

#2 the difference between gambling, speculating and investing is largely semantic. Although he is right to point out that investing in the stock market is nothing to be scared of and not to be confused with a visit to the local casino, this is not a meaningful issue

#3 definitely wrong. Sure, credit card debt is bad but debt finance is one of the best things that the average investor can use. It would be more meaningful to distinguish between good debt and bad debt

#4 of course saving means a sacrifice in terms of immediate consumption. To say otherwise is rubbish

#5 in effect he is saying it is ok to be ignorant. This is awful advice - the less you know the greater the risk of being ripped off

In short - I was not impressed

I noticed this too, and thought it was funny, but totally understand where he was coming from. When I write blog entries, my drafts often have things like [IMAGE HERE] or [LINK BACK TO JLP] or [URL NEEDED]. I intentionally put these in BOLD so that I notice that something needs to be fixed, but there are times — too many, I’m afraid — that I post entries that have this sort of stuff, or worse.

#1 - These days, investing is the products and with the plethora of products available all with different loads and fees and rates and LOTS of small print, investing is harder than ever before.

#2 - Gambling is also “legitimate business transaction between providers and users of capital”, and, with investing it would be interesting to get some real stats on just how many people win and how many people lose.

#3 - What Rick said

#4 - How is arguing (and correctly!) against the point - and in the first sentence - disproof of something? Sacrifices /do/ have to be made to invest. Giving up that sure-thing short term gain for a merely possible long-term success is hard hard hard.

#5 - I may know my own plans best but I’ll be darned if, even with all the info available, I know what the heck to do. And that includes picking/trusting somebody else who thinks they know what they are doing.

On a side note, did anyone else find it funny in the second video when he got his words tied up during the fifth point and said “Re-do that last part”? I guess he forgot to go back and edit out the mess-up.

My point is simply that you shouldn’t use debt to live beyond your means. But debt is just a tool, and there are very legitimate uses for debt.