My brother posted this question to us, "What is the difference between a Gambler and a Trader?"
In his opinion, a Gambler take Risk while a Trader manage Risk.
I have yet to meet a Gambler who makes money but I have many trader friends who are consistently making good money trading in financial products. The odds of taking money away from the Casino table is so slim that less than 1% of the gamblers win over a period of time. If gamblers can win, there will be no casinos around!
The reason gamblers lose is because the odds against them is so high. High rollers get 1st class air tickets, limousine services, 5 star hotel stay, good food and expensive wine, all FREE from Casinos. Casinos welcome them with their door wide open to have fun, entertainment and providing impeccable services because these high rollers will later contribute to their bottom line.
Gamblers don't know the odds of striking lottery, TOTO, horse or soccer bets including commission and the wide spread. Smart people only go in small occasionally for the fun and entertainment. The bookmakers are the one laughing all the way to the bank, that's why the government have the monopoly, it will be criminal for anyone trying to muscle into this lucrative business.
Traders have a much better chance of winning than gamblers because they are pitting their skill against other traders though having to pay comm for each transaction. The comm amount to billions to feed the financial industry, that's why more than 80% of the trader loses money and 99% of the retail customer loses their pants.
In my opinion, traders who don't make money consistently are gambling, they lack trading and money management skill. Hedge Fund and Unit Trust managers are good for nothing if they are unable to give positive absolute return over the monies they manage. It's sad to hear so many Hedge Fund and Unit Trust losing money big time despite having huge resources at their disposal.
Most Hedge Funds take risky gamble with their leverage of 1:30 borrowed from the bank. Most Unit Trust make small money during Bull market and lose big time in Bear market. Do you still want to pay them management fees while losing money for you? They are so professional in their explanation and excuses for their underperformance without feeling guilty or shameful.
Annual awards and recognition were given out to the best performing Unit Trust even when they are losing the least money among the industry!
Even Warren Buffett is not spared. Berkshire stock has lost close to half of its value since hitting a record high last December, as the company struggles with lower returns at its insurance businesses, the declining value of its stock holdings as well as paper losses on derivative contracts. He is a legend and greatest investor because of his consistent performance over the years.