How I Turned $1,000 into a Million Dollars in Real Estate ...

> From my stupid perspective the fact that the
> business/market odds are NOT fixed only make
> things WORSE for the market player/business
> owner.

I think it depends on what the odds are in each situation, though. With a casino, chances are over long periods of time you will lose money and there is nothing you can do to alter it.

With the market, chances are over long periods of time you will make money, even if you have no idea what you are doing, provided you diversify significantly.

Because the odds are variable in markets, there's opportunity there for people to add value in their investment decisions, whereas this is not the case with casino games for the most part.

>Just imagine throwing dice and suddenly it's
>weight, shape, the characteristics of the table
>are changed in the process.

Another way to look at this is to say that how predictable stocks are versus casino games is less. I'd say I'd agree with this, but focusing on this is only half the story. Apart from predictability you need to focus on average or expected returns.

For casino games, the results are fairly predictable -- your returns will be negative.

For the market, the results are more variable and less predictable, but you would expect your returns to be positive. Especially if you look over longer time periods and diversify.

>Just imagine plying cards that change on you
>because of the weather, irrational character or
>bad news from China.

>Virtually unlimited number of factors when you
>play an INDIVIDUAL stock make things worse
>than 'casino' activity with limited number of
>factors...

This is also a decent point -- there are a tremendous amount of factors that can alter the value of a stock. Weather can affect a lot of agricultural stocks and related industries, and news in China can affect a whole host of companies that have business there or deal with China, or their related industries.

With that in mind, I'd say if someone is not very familiar with a stock, they shouldn't invest in it alone but should get a balanced portfolio so mitigate those stock-specific risks somewhat.

Dien mentioned in a previous post that Buffett looks for predictable businesses to reduce those risks. I'd agree that that is one of the essential parts of his approach.

Basically the concept is, not all stocks or businesses are the same, and they differ in how predictable they are. To give an example, Coca Cola makes Coke and other drinks and sells it around the world. It has been doing it for a long time. They will most likely still be doing it in 2, 5, and 10 years time. I would say that they are more predictable than a start-up IT company developing a product it hasn't sold yet and hasn't tested yet.

So if you want to look at individual stocks, it is possible to try to look at stocks where you have an idea of all the major factors that can affect it, and where there are uncertainties and random elements -- like the impact on foreign exchange on a company is a common one -- you can at least be aware of what those random factors are and take them into account in your valuation. :)