Poker and Stock Market similarities and differences?

[BigFratDaddy]

I was arguing with a friend who said playing poker for a living is not a job its just pure gambling. I tried to explain to him that there is more to poker than just the luck of the cards (although it is a part of it). Then I asked him well what do you think the stock market it is and then we got into a big drunken discussion about it. What are some of the similarities and differences you see in being a professional poker player and stock broker. Ill start it off with one...

1. your whole cards are like stocks, you are willing to invest more money on them if you think they can end up making you profit.

[Romanowski]

stock broker or investor?

anyways.. yes I think there are lots of similarites...buying and selling stocks or anything in an efficient market still inherently has "risk" involved. You could argue moreso of a risk than sports gambling.

[JeromeFromSoutheast]

I actually think that the stock market is more like sports gambling.

For example:

Most people accept the fact that in sports gambling, when it seems like EVERYONE is on one side of a bet and the line is not moving accordingly, then taking the opposite side works out more often then not. I have noticed this phenomenom, but i am not too qualified to comment on it. What I AM very qualified to comment on is the similar "fade the public" aspect of the stock market (as I make my living this way). In the stock market (or almost any other financial market, for that matter), when it seems like EVERYONE thinks a stock is going to go UP, you want to sell or short it. Vice versa when everyone thinks a stock is going to go down (cover your shorts or BUY it). The reasoning is very simple, yet very few people can come to grips with it..... Stocks do not move based on valuation.... they ONLY move based on supply and demand.... If BUYING pressure is stronger than SELLING pressure, the stock will move up.... vice versa to the down side. So.... if EVERYONE thinks the stock is going to go up, that usually means that all of those people (i.e. everyone) has already purchased their shares.... so... there is not enough buying pressure to continue pushing the stock upwards.... yet, there remains a lot of people (i.e. everyone) who at some point needs to sell there shares (either to cash in their profit or take a stop loss). So, inevitably, what happens is a few people start selling to book their profits.... their is not much buying pressure left (remember, everyone already bought their shares), so the stock starts drifting down.... as it goes down, more and more people start getting out... you can see what happens next... the stock plummets until everyone that wants to get out has got out.... then it starts over again.... there is a saying in the stock market... "A bull market starts when everyone is bearish, a bear market starts when everyone is bullish..." A perfect example happened just a few months ago... on May 10, 2006, the Dow Jones Industrial Average was near all-times highs.... CNBC ran a cover story on their "morning call" program with reporters talking about how today was the day that the DJIA was going to make news highs and continue the bull market that had existed since October 2005.... guess what happened? Beginning the next day, the DJIA fell over 8% in 1 month.... The Nasdaq fell nearly 15%..... The bottom line: EVERYONE thought the market was going to to keep going up.... as soon as EVERYONE realised it wasn't going to keep going up, they rushed for the exit doors. On May 12, I was short both the DJIA futures and Nasdaq-100 futures, and netted almost 85k in a little under 4 weeks simply by "fading the public."

[The Kid 2822]

The major difference is that in buying a stock and placing a bet you are buying equity in a company with a stock. The fluctuations of the value may occur in the shares but unless the company goes belly up you're still holding a piece of something.

I think the trading options is much more similiar to gambling because "in the money vs. out of the money" is much more akin to a win or loss on a sports bet.

[actionsportscentral]

There are a lot of similarities. Primarily that - over time - the money moves from the "dumb, emotional, irrational" people to the "smart, patient" people. Even though at times it seems like the stupid people are winning (i.e. 1997-1999) - at the end of the day, patience and professional management are always rewarded.

[BigFratDaddy]

since we have a stocks and bonds section i figured id bump this

[actionsportscentral]

Ah....was just gonna comment until I realized I already did.

[jaypasco]

no, there is no simularities between the two.

[Romanowski]

Originally Posted by JeromeFromSoutheast

I actually think that the stock market is more like sports gambling.

For example:

Most people accept the fact that in sports gambling, when it seems like EVERYONE is on one side of a bet and the line is not moving accordingly, then taking the opposite side works out more often then not. I have noticed this phenomenom, but i am not too qualified to comment on it. What I AM very qualified to comment on is the similar "fade the public" aspect of the stock market (as I make my living this way). In the stock market (or almost any other financial market, for that matter), when it seems like EVERYONE thinks a stock is going to go UP, you want to sell or short it. Vice versa when everyone thinks a stock is going to go down (cover your shorts or BUY it). The reasoning is very simple, yet very few people can come to grips with it..... Stocks do not move based on valuation.... they ONLY move based on supply and demand.... If BUYING pressure is stronger than SELLING pressure, the stock will move up.... vice versa to the down side. So.... if EVERYONE thinks the stock is going to go up, that usually means that all of those people (i.e. everyone) has already purchased their shares.... so... there is not enough buying pressure to continue pushing the stock upwards.... yet, there remains a lot of people (i.e. everyone) who at some point needs to sell there shares (either to cash in their profit or take a stop loss). So, inevitably, what happens is a few people start selling to book their profits.... their is not much buying pressure left (remember, everyone already bought their shares), so the stock starts drifting down.... as it goes down, more and more people start getting out... you can see what happens next... the stock plummets until everyone that wants to get out has got out.... then it starts over again.... there is a saying in the stock market... "A bull market starts when everyone is bearish, a bear market starts when everyone is bullish..." A perfect example happened just a few months ago... on May 10, 2006, the Dow Jones Industrial Average was near all-times highs.... CNBC ran a cover story on their "morning call" program with reporters talking about how today was the day that the DJIA was going to make news highs and continue the bull market that had existed since October 2005.... guess what happened? Beginning the next day, the DJIA fell over 8% in 1 month.... The Nasdaq fell nearly 15%..... The bottom line: EVERYONE thought the market was going to to keep going up.... as soon as EVERYONE realised it wasn't going to keep going up, they rushed for the exit doors. On May 12, I was short both the DJIA futures and Nasdaq-100 futures, and netted almost 85k in a little under 4 weeks simply by "fading the public."

read this post and learn boys

[revnecro1273]

Originally Posted by jaypasco

no, there is no simularities between the two.

such insightfulness

[yungmune]

you cant compare gambling with teh stock market..the stock market is a little gamble. most of the time ppl win in the stock market. most of the time ppl lose in gambling.