Guru Speak

 From an investment professional's standpoint, there is a clear difference between the two, and also perhaps a more closely related word - speculating.

Let us first examine the word gambling and its key composition. Gambling, in its most simplistic definition, is to stake or risk money on the outcome of something involving chance. This chance, or odds, is usually predefined.

Six-deck blackjack at a casino, for example, has predefined odds that give the house an edge of 0.4 per cent, meaning the best blackjack player will eventually lose 40 cents on every 100 dollars played.

Essentially what a gambler buys, for the stake put up, is the comfort feeling that lady luck stays on his side for a few rounds to beat the 0.4percent odds against him.

This comfort or lucky feeling that the gambler buys is clearly intangible.

Investing, particularly in stocks, is a different story. Every dollar spent to purchase shares buys the investor ownership of the company. Immediately that means assets less liabilities, which is something tangible. The share price, despite the fact that many hope or feel they can predict pattern, has no predefined odds toward any side.

Unfortunately, our actions in the real world are not so clearly defined. When making an investment choice, how do we know we are gambling our money or actually making an investment? Experts commonly agree that the amount of time spent on research and analysis before putting up money characterises these actions.

A common saying in the market has it that if you do not know what you are buying, you are gambling with the money. Of course, sometimes you win, but lady luck plays the role.

Perhaps a more closely related word to gambling - often interchangeable - is speculating. Experts agree on the similarities between the two actions, with speculation having perhaps more odds toward the player. And that is achieved by some effort spent on analysis.

What is the fuss about this characterisation, one may ask? It is fruitful to know which road we are taking, as we will then know what to expect. Buying based on tips from friends that make you feel lucky may win some stake, but pays tribute to lady luck. Odds can be toward one's side through thorough analysis, and only that qualifies the action as an investment rather than a gamble or speculation.