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If you can prove that staking a bet alters the chance of something happening I'll be happy to use the proof as a method.

There’s a peculiar idea that buying stocks and shares is ‘investing’ though.

The only person who invests is the first person to buy stock in a company. The second-hand market is purely speculative, and its only productive value is in providing an out to the original investor…

I had an idea that derivatives would come along to muddy the waters.

There are arguments to be made about the second hand market enabling the primary investment but I like my purist intent. I don't like derivatives in general though and they fall into my widening the definition of investment clause.

Yep, pretty much. Mostly, gambling needs higher regulation.

People have always needed protecting from their own greed for sure.

You missed out leverage in terms of shitting in the pond.
The recent fiscal event in the UK exposed how poorly a regulated pensions industry hedged financial risk.

The margin call is the petit mort of our financial system

We probably don't disagree about what gambling is but there are ways to distinguish it from investment. I accept that the term has been diluted in general use though. Foolishly I set out to simplify the terms.

You invest in something to profit from affecting an outcome.

You bet on something to profit from predicting the outcome.

They might not be lacking due diligence but 'past performance does not guarantee future income'.

Nobody suggested that anybody with a pension should asume that stocks will always go up. You're the one who has now suggested that they did and that I was blessing that attitude. That's just you entering the discussion in bad faith. This was a discussion about the gravity and impact of Holmes's crime, stonehedge said that people who invested money that they couldn't afford to lose were also at fault and I just pointed out that some people who were hurt didn't make any choice to see their money gambled on Theranos.

'ordinary people'

People whose only contact with the stock market is the pension fund somebody else manages for them, people who don't have the luxury of tracking the market and do have some reasonable expectation that the fund managers be more cautious than some were. Some of them were badly burnt and the losses are more damaging to them than to most of the foolish investors who made direct choices. And some of that blame lies with fund managers as well as with Holmes, but driving a car at 90mph past a school isn't less of a crime if some people don't look left and right before stepping into the road or if the council doesn't install adequate traffic calming measures.

Isn't that how any large scale investor operates? He's invested some of his own money, and attracted lots more from other investors, primarily oil rich sovereign funds I believe.

I don't think it's a scam at all, he's just invested in a lot of technology companies, some have been successful (and in the interests of transparency, I work for one of them) but others have been abject failures.

The randomly spray chips on the table strategy on the buy side, and the create a strong narrative of innovation and disruption pitchdeck on the sell side.

An example selection of word salad and abstracted figures here.
https://www.slideshare.net/hackersandfounders/hack-fund-v-pitch-deck

In unrelated news..

https://www.bbc.co.uk/news/uk-scotland-63659754

its only productive value is in providing an out to the original investor

That's the whole point, though. If there was no secondary market for capital it would be extremely difficult for any company or venture to raise primary capital. It's got nothing to do with derivatives.

+1

I didn't really understand how derivatives came into it.

Very large public companies often issue more shares and people buy these for the dividend income on the strength of their previous* history of distributing dividends rather than mad gainz.

*not talking about past performance, but some companies tend to do dividends more than reinvesting.

I guess my quibble is more that we casually call it “investing”, rather than something else entirely. Not that it’s not useful, or anything like that.

I think on most people’s definition of “investing” it is investing, though. And that kind of makes sense - from the ‘investor’s’ perspective, why should my activity have a different name if they buy the shares from one person as opposed to another? They’re still doing the same thing

Yeah, agree with andy above. In the US they have the Howey Test, which is as good a definition as any: "investment of money in a common enterprise with a reasonable expectation of profits to be derived from the efforts of others."

Isn't @slippers point that only in the very first transaction does the money go to the common enterprise? Or at least that's part of the point.

But that's a bit like saying a remortgage is a meaningfully different transaction from a house purchase from the bank's perspective. It's totally fungible.

I worked at a "Financial spread/CFD" company for a while and two things were made very clear when I joined:

1, 95% of people lose money or break even
2, Try to avoid using the word betting in relation to financial spreads as it sends the wrong (but actually right) impression

Yeah, there's a reason that IG and their Cypriot ilk can offer tax-free spread betting... their products are regulated as gambling contracts not investment contracts.

It's not the bank's pov that is the issue here.

We can set the analogy aside if you like.

I think this debate is really about a deeper point, i.e. the nature of capital in the modern economy and what we really mean when we talk about returns on capital. Are all dividends just stolen wages or is there a separate factor of production that needs to be compensated etc etc

How about using those investments to pay for a better world?
https://www.newyorker.com/news/daily-comment/how-to-pay-for-climate-justice-when-polluters-have-all-the-money

Yeah, I work in ESG and the question of primary vs secondary markets is IMO not one asked enough when it comes to ESG investing.

What's interesting right now is "funding the transition" - ie if you blacklist all the oil companies you cut off their ability to invest in decarbonisation when they are some of the companies best placed to do so.