Have you been to the casino lately?
I haven't, yet I gamble with my entire life savings nearly every single day.
I'm not talking about online poker or horse racing - I'm talking about gambling with stocks. And, instead of buying the lottery-type stocks that you think I'm risking my money on, I'm playing a game of chance that I'm virtually guaranteed to win the longer I keep playing.
Let me explain…
Don't Ignore Lady Luck
Investing is a game of chance. As an investor, you can dramatically boost your returns and limit your downside by playing that game well. This is something that those who have already requested free net net stock picks already know.
Michael Mauboussin of Legg Mason says that you can order activities on a scale from those that have outcomes that are completely based on skill, and those that are completely based on luck. Building handcrafted furniture, for example, comes very close to being an activity with an outcome that's totally based on skill. The way a carpenter holds his blade, measures the pieces for his cabinet, shapes the arch of the cabinet's mantle, and layers the textures of wood within the final piece all have a major effect on the finished product, the outcome.
The outcome of playing the lottery, on the other hand, is nearly totally based on chance. There is little that you can do to influence the eventual outcome - unless you live in some crooked 3rd world country. It doesn't matter what numbers you pick, what day you buy on, or even really how many tickets you buy - your eventual outcome is unlikely to change much no matter what you do.
Investing falls somewhere between those two extremes. Investing is definitely not purely a game of chance, since there are master
