Investing vs. Gambling: The Shocking Truth About Your Money | Finance Hacked
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FINANCE HACKED team would like to thank the audience for their interest and support of the Channel in the past time. We hope that the content of FINANCE HACKED will bring long-term value to the audience.
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Are you gambling with your future or truly investing? Discover the astonishing secret that can transform your financial life! We break down the crucial differences between investing and gambling using eye-opening examples and the power of probability. Learn why a seemingly small advantage can lead to long-term wealth, while chasing quick wins often ends in loss.
From the pitfalls of casino games and the dangers of market frenzies to the wisdom of Warren Buffett and Charlie Munger, we reveal the mindset and strategies of successful investors. Understand the importance of research, patience, and a value-driven approach to building lasting wealth.
Stop leaving your financial future to chance! Learn how to identify real investment opportunities, avoid common pitfalls, and start building a secure future today.
Watch now to unlock the secrets to true financial freedom!
#Investing #Gambling #Finance #WealthBuilding #PersonalFinance #MoneyTips #StockMarket #ValueInvesting #FinancialFreedom #InvestmentStrategy #WarrenBuffett #CharlieMunger #LearnToInvest
----------------------------
FINANCE HACKED team would like to thank the audience for their interest and support of the Channel in the past time. We hope that the content of FINANCE HACKED will bring long-term value to the audience.
All contributions to support the development of the Channel, dear viewers can send to:
- PayPal: https://paypal.me/FinanceHacked
- Wise: https://wise.com/pay/me/hongnguyenphuongd
----------------------------
Are you gambling with your future or truly investing? Discover the astonishing secret that can transform your financial life! We break down the crucial differences between investing and gambling using eye-opening examples and the power of probability. Learn why a seemingly small advantage can lead to long-term wealth, while chasing quick wins often ends in loss.
From the pitfalls of casino games and the dangers of market frenzies to the wisdom of Warren Buffett and Charlie Munger, we reveal the mindset and strategies of successful investors. Understand the importance of research, patience, and a value-driven approach to building lasting wealth.
Stop leaving your financial future to chance! Learn how to identify real investment opportunities, avoid common pitfalls, and start building a secure future today.
Watch now to unlock the secrets to true financial freedom!
#Investing #Gambling #Finance #WealthBuilding #PersonalFinance #MoneyTips #StockMarket #ValueInvesting #FinancialFreedom #InvestmentStrategy #WarrenBuffett #CharlieMunger #LearnToInvest
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LearningTranscript
00:00How do investing and gambling differ?
00:03Today, we're about to explore an astonishing secret that could completely transform your financial life.
00:11Are you ready?
00:13Because what is about to be revealed will not only surprise you, but may also change the way you view money.
00:21Imagine this, you are walking down a busy street when, on the left side, a street vendor sets up a game.
00:29It appears simple, this vendor confidently claims that the game has been running for hundreds of years, is open 24-7, and welcomes everyone.
00:40It sounds appealing, doesn't it?
00:43But hold on, don't rush to bet, because on the right side of the street there is another street vendor.
00:50At first glance, these two stalls seem to offer the same game.
00:55Yet I want you to understand that a small difference between them will determine whether you become a millionaire or end up penniless.
01:04Let's start with the stall on the left.
01:06Here, they use a standard deck of playing cards.
01:10Each time you bet, you only need to put down one coin, and if you win, you receive 53 coins.
01:18The winning condition is that the card you choose must match the card drawn at random.
01:25Sounds fair, right?
01:28But here's the harsh truth, if you play long term at this stall, unless you are one of the rare lucky ones, one in 10 million, you will lose all your money.
01:39This is the very nature of gambling.
01:41Now, let's move to the stall on the right, they also use a standard deck of playing cards.
01:50And each bet is one coin, but if you win, you receive 50 coins, three coins less than on the left.
01:58However, there is one significant difference, they have removed two joker cards and three other cards from the deck.
02:06You might think this is cheating, but in reality, this is the difference between investing and gambling.
02:14If you play long term at the right stall, unless you are extremely unlucky, you will gradually win all the money from the stall owner.
02:23Now, let's talk about the power of probability.
02:27You might wonder why the right stall, despite offering a lower payout, actually helps you make money.
02:34The answer lies in one simple yet magical word, probability.
02:40With just a little over a 2% advantage, as long as you aren't the unlucky type, getting rich is just a matter of time.
02:50This is also why Warren Buffett once said, if you aren't willing to own a stock for 10 years, don't even think about owning it for 10 minutes.
02:58But here is a stark fact, true investors are like those searching for the right stall in a vast ocean, while the owners of the right stalls are like elusive phantoms, always shifting and hard to predict.
03:13You need a keen eye to distinguish between the genuine and the fake.
03:17Now, imagine you are playing a coin toss game, if it comes up heads, you win one coin, if tails, you lose one coin.
03:28This game appears fair, right?
03:31But what if someone told you that this coin has a 51% chance of landing on heads, what would you think?
03:38This is precisely the difference between investing and gambling.
03:44Gambling is often a zero-sum or even negative-sum game since the casino always takes its cut.
03:53Conversely, investing, if done correctly, is about finding those coins with a win probability of 51% or higher.
04:02Returning to the left stall, do you know what makes casino owners fear the most?
04:08They often say, we don't fear the players who sit forever, we only fear those who know when to stop.
04:16This means that casinos aren't afraid of players who keep playing because they are destined to lose, but they fear those who know when to stop.
04:25Yet, let's be honest, how many people can truly do that?
04:29Most of us let greed cloud our judgment and eventually become pathetic losers.
04:36Before we delve deeper, don't forget to follow our channel for more money truths and to help you quickly achieve financial freedom.
04:45Finance Hacked Whamily greets you and our dear friends.
04:48Let's look at a real-life example.
04:52In 2017, a woman named CIAJ Abranen, a waitress at a Las Vegas casino, won a jackpot of $34.9 million.
05:04But guess what?
05:06Just nine weeks after winning, she was involved in a serious car accident that left her paralyzed.
05:12This tragic story shows us that even when you win big, life can take an unexpected turn.
05:21In contrast, consider the case of Warren Buffett, starting in 1965 when he began managing Berkshire Hathaway.
05:29By 2021, the company's stock price had increased by over 2,262,616%.
05:39This wasn't luck.
05:41It was the result of constant learning, deep research, and making wise decisions.
05:47So what is the real meaning of investing?
05:51Investment guru Charlie Munger once said that most people who achieve outstanding results have three factors.
05:57They are extremely smart.
06:00Work incredibly hard and are very lucky.
06:05But I want to share a harsh truth with you.
06:07Most of us are not geniuses.
06:10So what should we do?
06:13The answer lies in Munger's next sentence.
06:16If you start early and persist for a long time, perhaps you will eventually possess one or two of these traits.
06:23This is the essence of investing, continuous learning, accumulating experience, and honing the ability to see through issues.
06:34Look at how Buffett does it.
06:36Did you know that Buffett spends five to six hours every day reading?
06:42He reads annual reports, financial statements, industry news, and many other documents.
06:49That's why he is able to identify truly valuable companies in the vast sea of the market.
06:56But you don't need to be Buffett to invest successfully, just work harder and be more patient than most people.
07:04Remember, investing is a marathon, not a sprint.
07:08Now, let's return to reality and consider the current stock market.
07:15Recently, stocks in the aluminum sector have been continuously falling, causing some investors to panic and sell off shares without even considering their losses or gains.
07:26On social media, negative opinions about the market are on the rise, fueling a pessimistic mindset.
07:35Some analysts even warn that it is not the right time to invest in stocks.
07:41Economists have predicted that major indices, such as China's, might drop below 1600 points and that in the next five years there may be no bull market.
07:53It sounds frightening, doesn't it?
07:57But let me reveal an astonishing fact, it is often these frenzied market emotions that present the best investment opportunities.
08:05Look back at history, during the 2008 financial crisis, the Dow Jones Index fell from 14,164 points in October 2007 to 6,547 points in March 2009, a drop of more than 50%.
08:26Many believed the end was near and rushed to sell their stocks.
08:31Yet those investors who remained calm during the panic, and even bought when the market was plummeting,
08:40reaped remarkable rewards over the following decade.
08:45This is why Buffett once said,
08:47Be fearful when others are greedy and greedy when others are fearful.
08:52But achieving that isn't easy.
08:54When the whole market plunges into panic, staying calm requires tremendous courage and intellect,
09:02market frenzies like these have occurred several times throughout history, in 1994, early 1999, and 2005.
09:13Each time, it signaled the end of the bear market phase and the dawn of a bull market.
09:19Take 1999, for example, during the build-up of the internet bubble, many believed this time would be different.
09:29They rushed to invest in unprofitable internet companies,
09:33while Buffett remained steadfast with his value-investing philosophy and refused to join the frenzy.
09:40The result?
09:41When the bubble burst in 2000, those who chased the frenzy suffered heavy losses, while Buffett remained unfazed.
09:51This is why understanding history is so important.
09:56As Mark Twain once said,
09:58History doesn't repeat itself, but it does rhyme, so, in such a frenzied market, how should we invest?
10:06The answer is value investing.
10:08The core of value investing is to view stocks as certificates representing your ownership in a business.
10:17If you buy into a good company, what is there to fear?
10:22Imagine having the opportunity to purchase shares of high-quality companies like HOA FAT,
10:28Vietkumbank, or Wienermilk at low prices,
10:31you wouldn't be scared because you know that the intrinsic value of these companies far exceeds their current market price.
10:39Consider a specific example.
10:42In March 2020, when the COVID-19 pandemic broke out,
10:46the market plunged into panic and many high-quality stocks fell sharply.
10:52At that time, Apple's stock price dropped from around $80 in mid-February to about $55 by the end of March,
11:00a decline of more than 30%.
11:03But investors who understood Apple's value did not panic.
11:08Instead, they saw it as a rare opportunity to buy.
11:12The result?
11:14By the end of 2021, Apple's stock had risen to approximately $180.
11:20An increase of over 200%.
11:25This is the power of value investing.
11:28When you truly understand a company's value,
11:31short-term market fluctuations become your allies rather than your enemies.
11:36However, here's a harsh reality.
11:39Most individual investors are not capable of identifying truly good companies.
11:44As Charlie Munger once said,
11:47individual investors' transactions are like gambling.
11:51They know nothing about businesses or what is really going on.
11:55They simply chase stock prices.
11:58This is why most individual investors eventually lose.
12:02They are not really investing.
12:04They are merely gambling.
12:05Consider a practical example.
12:09In January 2021, GameStop's stock surged thanks to a movement by small investors on the Reddit forum.
12:18In just a few short weeks, the stock price skyrocketed from around $20 to $483.
12:26Many individual investors bought at high prices, dreaming that the price would continue to rise.
12:33But when the bubble burst, the stock quickly dropped to about $40,
12:39causing those who bought at high levels to suffer heavy losses.
12:44This story shows the danger of blindly following trends and engaging in short-term speculation.
12:51True investing must be based on a deep understanding of a company's fundamentals
12:56rather than mere conjecture about stock price movements.
12:59You might ask, should we choose quantitative investing then?
13:06But let me tell you an astonishing truth.
13:08Many quantitative investment institutions are essentially engaging in high-level gambling.
13:15Munger has pointed out that these institutions often use trading algorithms
13:19that repeat annually to maximize profits by increasing leverage.
13:24The use of ever-increasing leverage boosts transaction volume,
13:29yet the profits diminish, exposing them to significant risks.
13:35That is why we often hear of hedge funds going bankrupt due to excessive leverage.
13:41Consider a famous example, long-term capital management, LTCM.
13:46This hedge fund, established by Nobel-winning economists, collapsed in 1998 due to over-leverage.
13:56LTCM employed complex mathematical models alongside high leverage,
14:02and under normal market conditions, they achieved substantial profits.
14:07But when the Russian financial crisis hit in 1998, their models failed.
14:15In just a few short months, the firm lost for $0.6 billion and eventually had to be taken over
14:22by major financial institutions on Wall Street under the coordination of the US Federal Reserve.
14:28This story teaches us that even the smartest people, using the most complex models,
14:35can fail if they become overconfident and underestimate risks.
14:40Quantitative investing is not a panacea.
14:43It, too, requires caution and intelligence.
14:47Now, let's return to the original question, how do investing and gambling differ?
14:54On the surface,
14:55They may seem very similar, both try to make a profit in a short period and do not create new social value.
15:04However, there is one important difference.
15:07Investing is based on research and a deep understanding of companies, industries, and the economy,
15:14whereas gambling solely depends on luck.
15:18When an investor buys stock, they are essentially owning a piece of that company.
15:23They care about factors such as the company's fundamentals, the capability of its management, and its growth prospects.
15:33In contrast, gamblers are not concerned with these factors.
15:39They only care about the next card or the next number.
15:42For example, suppose you have 10,000 dong.
15:48You could choose to go to a casino to play roulette or invest in a company you have thoroughly researched.
15:55If you choose the casino, your chances of winning are fixed and always favor the house,
16:01and over time, you will almost certainly lose all your money.
16:05But if you choose to invest, the situation will be different.
16:11Imagine you thoroughly research Amazon, understanding its business model, competitive advantage, and growth potential.
16:18In 2010, you decide to invest 10,000 dong in Amazon stock,
16:25and by 2022, your investment could have grown to over 300,000 dong.
16:32This is the difference between investing and gambling.
16:35Investing is a decision based on knowledge and analysis.
16:40While gambling is simply leaving it up to chance,
16:43So how does one become a successful investor?
16:47First, continuous learning is essential.
16:50Continually enhance your knowledge and investment skills by reading annual reports,
16:56financial statements, industry analyses, attending investment courses,
17:01and listening to successful investors' lectures.
17:05Second, do your research.
17:07Delve deep into the companies and industries you wish to invest in.
17:11Understand the business model, competitive advantages, financial health, and management team of the company.
17:21Analyze industry trends, competition, and regulatory environments.
17:28Third, be patient.
17:30Investing is a long-term game.
17:33As Buffett once said,
17:35the stock market is a device for transferring money from the impatient to the patient.
17:39Do not expect to get rich overnight.
17:43Focus on long-term value growth.
17:47Fourth, be disciplined.
17:49Develop a sound investment strategy and adhere to it rigorously.
17:54Do not let short-term market fluctuations affect you.
17:59When the market panics, remain calm.
18:01When the market goes crazy, keep a clear head.
18:05Fifth, think independently.
18:08Don't blindly follow others' advice.
18:12You must be accountable for your own investment decisions.
18:16Cultivate independent judgment and resist herd mentality.
18:21Sixth, diversify.
18:23Do not put all your eggs in one basket.
18:27Spread your risk by investing across different sectors and geographical regions.
18:33Seventh, control costs.
18:37Pay attention to investment costs, including transaction fees, taxes, and other expenses.
18:45Low-cost index funds may be a good choice for many investors.
18:50Eighth, consistently monitor.
18:53Review your portfolio periodically, but avoid excessive trading.
18:57Adjust your investment strategy as necessary based on changes in companies and market conditions.
19:06Ninth, remain humble.
19:08Always remember that the market is unpredictable.
19:12Even the most successful investors can make mistakes.
19:17Maintain an open mind and always be ready to learn.
19:20Lastly, manage your emotions.
19:24Investing is not just about numbers and analysis.
19:27It also involves psychology and emotion.
19:31Learn to control your greed and fear and remain calm amidst the market's ups and downs.
19:37Let's consider a concrete example.
19:40Suppose you are interested in the technology sector and decide to invest in Apple.
19:46What do you do?
19:47First, you would thoroughly study Apple's financial reports, examining its revenue structure, profit margins, cash flows, and other factors.
20:00Then, you would analyze Apple's product line, researching market share and the growth potential of products like the iPhone, iPad, and Mac.
20:09You'd also pay attention to Apple's services, such as the App Store, and Apple Music, to evaluate their roles in the company's future growth.
20:20Next, you would study overall technology trends, how the proliferation of 5G technology might impact the smartphone market,
20:29or how the development of artificial intelligence and big data could present opportunities and challenges for Apple.
20:36Simultaneously, you would look at Apple's competitors, such as Samsung and Huawei, assessing their strengths, weaknesses, and competitive positions relative to Apple.
20:50Finally, you would consider macroeconomic factors, global economic growth, trade policies, or exchange rate fluctuations to gauge their potential impact on Apple.
21:02Only after completing all this thorough research would you decide on your investment.
21:09Even after investing, you must continue to monitor the company's progress and industry changes, ready to adjust your strategy when necessary.
21:18That is the true nature of investing.
21:22It requires time, effort, and intellect.
21:25But in the long run, the rewards are well worth it.
21:29Now that you understand the difference between investing and gambling, the question is, which path will you choose?
21:37Will you be the gambler who leaves your wealth to chance?
21:41Or will you become an investor who builds wealth through learning, research, and patience?
21:47Remember, this choice will determine your financial future.
21:53Choose wisely, for your future lies in your hands.
21:57Finally, let me conclude with a saying by Munja,
22:01If you love what you do and love your colleagues, you'll never work a day in your life.
22:06This insight holds true, not because I used any magic formula, but because many long-lasting and sustainable partnerships succeed when one person excels at one thing while another excels at something else.
22:22They naturally divide the work, and everyone enjoys what they do.
22:27This applies not only in business partnerships, but also in the relationship between you and the market.
22:33Find the area of investing in which you excel, stick with it, and ultimately you will succeed.
22:42Remember, investing is like a marathon, not a sprint.
22:47Remain patient and always nurture your passion for learning, and you will cross the finish line as the one who smiles last in the market.
22:55Now is the time to act.
22:59Are you ready?
23:00It's time to stop gambling and start truly investing, for only then can you carve out your place in the vast financial market.
23:10Remember that every great investor began with a first step.
23:14Perhaps today is the day you take that important step.
23:18Your future will undoubtedly be grateful for the wise decisions you make today.
23:25The investment world is waiting for you to explore it.
23:29Step forward, arm yourself with knowledge, hone your skills with patience, and bind yourself with discipline.
23:37In this world of finance filled with opportunities and challenges, go ahead and write your own legendary story of wealth.
23:45I firmly believe that once you truly understand the difference between investing and gambling,
23:52and when you begin thinking and acting like an investor, your financial life will change dramatically.
23:59You will no longer be a slave to the market, but its master.
24:04So, my dear friend, are you ready?
24:08Are you ready to embark on your investment journey?
24:11Always remember that every great journey begins with a single step, and now is the best time for you to start.
24:20Step forward and create your own legend of wealth.
24:24Goodbye and see you next time.