Are You Trading or Gambling?
Around 20 years ago, I had the opportunity to listen to a member of Nasdaq top management talk about the stock market. It&#x27;s all a _tiny_ bit blurry, being a long time ago, but I remember how he talked about three different perspectives for investing in stock:<p>First, the &quot;company perspective&quot;. An investor would buy stock in a company they believed in. Maybe they had good products, or good management, or something else. The idea was looking at the how well the company would perform.<p>Second, the &quot;stock perspective&quot;. An investor would ignore the underlying company, but look at the stock itself. It didn&#x27;t really matter if the company was doing good, but only if the stock itself had good potential. The idea was looking at how well the stock would perform.<p>Finally, the &quot;game perspective&quot;. An investor would not really care about the stock, but only about the behavior of other investors. Day trading would be the example here, profiting mainly on marketplace dynamics, no matter the stock. The idea was looking at how to be a better player than the others.<p>Then he talked about how the game perspective was the only model that really matched the marketplace, and how the stock market had evolved from being place where people would invest in companies, to a place where they would play a game with other peopl.