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Quote

“The safest way to double your money is to fold it over once and put it in your pocket.” - Kin Hubbard

Is Investing Gambling?

Welcomeeee to the casino!

Buzzers flashing, the sounds of chips being tossed on a table, some people are whooping while the face of others shows defeat.

You walk through the pit looking for a spot at an empty table. You have a few hundred bucks burning a hole in your pocket and are ready to get rich or go broke trying. You finally find a table, toss the dealer your money, and she hands you a stack of chips.

The game….Blackjack.

Game One - Blackjack

The rules to Blackjack are simple. Get a 21 total between your cards and you win, go over 21 or have the dealer beat your total and you lose, or tie if your totals match.

As you sit there counting your chips you think “my odds have to be pretty good.”

For a casino…yes your odds are some of the best.

In traditional Blackjack there is a 42.22% chance you win, a 49.1% chance the dealer wins, and a 8.48% chance you push (tie with the dealer).

The key here though is these odds are only true when you play perfect strategy.

Unfortunately, it’s 1AM and you are six whiskeys deep. After about five minutes you have burned through half of your chips.

Instead of being a degenerate and putting them all on the next hand you stand up and figure you will try your luck at a different game. After a bit of strolling you see a table off near the corner. It’s empty. The dealer looks bored.

Despite this, you walk up and take a seat….

Game Two - Market Mayhem

When you sit down the table looks different.

The rules have a list of holding periods with an odds of positive return.

You start to question if this sounds too good to be true. All I have to do is hold for 10 years and the odds my money increases is 94%?!

You look up to question the dealer. He’s an older fellow, fairly short, with white raggedy hair, and a pair of glasses that look like he was born in 1930 (hint he was).

His words of wisdom…

After this, he tells you that funds like VOO, VTI, and SPY are all great ETFs that closely follow the S&P 500. Shown on the bonus bets is another statement about the game and where the advantage lies.

It reads, “since 1957, the S&P 500 has delivered an average annual return of 10.26%.”

“Ahh, holding long term is the secret here.” The dealer winks as you place your chips on the 1 year and 10 year places.

It’s time to get comfortable, you are playing the long game.

Conclusion

Hopefully you enjoyed this quick post comparing your investing odds to blackjack (and see why investing and gambling are two different animals).

There is definitely risk when it comes to investing, but it can be limited by investing in proven assets and holding long term. As the years go by, the odds of seeing a positive return on your money increase substantially.

Sure it’s not as exciting as putting it all on black, but the stock market is a casino where it pays to be patient.

I’ll see you at the tables. ~ Cade

Cade's Finds

Best Investing Books Ranked - Joseph Carlson made a great video ranking 18 of his favorite investing books. You’ll be surprised where the “Intelligent Investor” falls on this list.

Investing Thread Compilation - My friend JRod put together a list of his 10 most educational threads from 2023. Everything from 401k facts to why he doesn’t pay extra on his mortgage.

Best Memes

Underperformers….what is your drink of choice?

2024 is about to be a movie.

Nothing in this email is intended to serve as financial advice. Do your own research. Thanks for reading, if you have any questions, comments, suggestions, etc. about the email don’t hesitate to send me a reply.