Warren Buffett warns investors not to gamble on stocks

[TexasTowelie]

OMAHA, Neb. (AP) — Billionaire Warren Buffett warned people not to think investing is an easy way to make a fortune as he answered a variety of questions at Berkshire Hathaway's annual meeting Saturday.

Buffett said it can be tough to pick the long-term winners. He pointed out that in 1903 there were more than 2,000 car companies, and nearly all of them failed even though cars have transformed the country since then.

“There’s a lot more to picking stocks than figuring out what will be an incredible industry in the future,” Buffett said. “I just want to tell you that it’s not as easy as it sounds.”

Buffett has said that most people will fare better by owning an S&P 500 index fund instead of betting on individual stocks. He said many of the novice investors who jumped into the market recently and drove up the value of video game retailer GameStop are essentially gambling.

Read more: https://fremonttribune.com/news/state-and-regional/warren-buffett-warns-investors-not-to-gamble-on-stocks/article_4619c221-c8d2-5b8a-9088-3732ff01cc4e.html

[Deminpenn]

1. Gambling is now practically a way of life for many

Americans. That's why, imho, the SEC (?) should establish a new market just for gambling on stocks. It would not affect the stocks themselves but give those bent on betting and gambling a way to do it without putting anyone at risk but themselves.

[jimfields33]

2. You almost have to with 401K and IRA

I wish I bought game stop a year ago. Who knew? Young kids apparently. Ratz.

[Deminpenn]

3. No you don't

As Buffet said, index funds or mutual funds tailored to your risk adverseness work just fine.

[jimfields33]

4. True. I was just hyperbolic in my statement

[Deminpenn]

5. So much of a stock's volitility and price fluctuation is based on

algorithms that are running super fast and non-stop, buying and selling for fractions of a cent gain. That shouldn't be part of a normal stock market. That's why this kind of trading and other strategies like it should be segrated out and given their own market - something like the commodity futures market, but not affecting the actual businesses.

Right now companies are punished with lower stock prices for long-term thinking and planning. That should not happen in a correctly functioning market.

[Midnight Writer]

6. 25 years ago I bought two funds. One an S&P Index and another high flying managed fund.

The managed fund holds about 20 companies and shows some impressive yearly gains, 40% and up some years.

I bought each of these for the same amount at the same time.

Today, the S&P fund has grown by about 50% more than the managed fund.

Some years the managed fund blows the S&P out of the water, but over the long haul the S&P is performing better.

Tortoise and The Hare.

[Caliman73]

7. There has always been gambling in the Stock Market.

What was the crash in 1929 about? The Savings & Loan scandal? The crash of 1987? The crash of 2008?

In the 20's the big fish reeled the average person into the market and literally played games with stock prices to separate suckers from their money. Savings and Loan was about allowing them to make riskier bets with other people's money. 1987 was about junk bonds and computerized trading models. 2008 was about CDO's and over leveraged brokerages. In other words, people using the market as a rigged casino rather than investing money in solid companies to help them finance and raise capital for growth and projects. There is always risk in the market but when you allow people to take riskier and riskier steps to get "the big bucks" then it always goes bad eventually.