Understanding the Mathematics of Personal Finance

Gambling

You may have been told that any place you put your money that’s not absolutely safe with insured protection is, to some extent, gambling. Accordingly, any invest­ing, whatever the risk level, is gambling.

I’m going to be more restrictive. I’ll only consider gambling to be betting your money on games of chance. Mixed systems, such as poker, combine skill and chance. You hope that your skill level will be higher than that of any of the other players so that in the long run, you will prevail.

Let me state my conclusion even at the start of the discussion. The only people who make money on games of chance are the casino owners. For games of chance, there are no systems; there are no lucky numbers; and there are no incantations— nothing can help you other than a little luck. And the little luck that you need is rare. I am always impressed by all the people who come back from a weekend in Las Vegas with more money in their pockets than they left with. I just can’t understand how that poor town didn’t go broke and shut down years ago.