Investing is Like Gambling (You Need Luck on Your Side)

Every red-blooded person has, at some point, a natural disposition toward gambling—whether it’s buying a lottery ticket, betting on sports, or jumping into a money-making scheme without fully understanding it. The thrill comes from risk and the possibility of a windfall. When the jackpot or the lucky Toto number is hit, the win is often attributed to fate, fortune, or sheer luck. And just as often, the risk of losing everything is dismissed as “something that didn’t happen to me.”

That thrill is intoxicating. Gambling gives you a hit of adrenaline every few minutes. By contrast, reading annual reports and financial statements feels dry, tedious, even boring. Because investing also involves money and outcomes influenced by chance, it’s easy to mistake investing for gambling.

But here’s the mistake: investing is not gambling. At its core, investing requires analysis, discipline, and sound judgment, with as few behavioural biases as possible. While both involve risk, investing tilts the odds in your favour by focusing on probabilities and, most importantly, the margin of safety.

A margin of safety means you buy an investment at a price well below its intrinsic value. Even if the unexpected happens, your downside is protected. With this approach, luck is not eliminated, but its role is greatly reduced. You may strike lucky once as a gambler, but over the long run, luck alone won’t sustain you. A disciplined investor, however, stacks the odds to repeat success again and again.

For a deeper dive into the margin of safety and how to apply it, I recommend Invested by Danielle Town—a practical guide to long-term, Buffett-style investing. Click here to read reviews and consider purchasing it.