Five Cents Ten Cents

The $26 million dollar (less) man

The headline “Local businessman loses $26m at RWS casino over 3 days” is a sobering reminder of the possible consequences of a gambling approach to financial freedom.

What is staggering is the amount; but underlying this story is what can potentially happen to any of us when we take a gambling approach towards financial freedom.

I have been to the Resorts World Casino in Sentosa. It was an educational and interesting experience to see groups of people who come together with a common purpose to gamble with their money on the various games provided by the casino. While individual motivations differ, the activity is the same. Taking a bet on a random outcome and potentially gaining or losing money in the toss of a dice or roll of the roulette wheel.

Some feel that gambling is a vice. Others feel that it can be a harmless hobby if one plays within one’s limits and sees it as a leisure activity and not a money making opportunity.

I too have gambled on SGX. Punting on short-term movements in share prices of companies which I had little interest to understand and research. How different is that from gambling in a casino? I am also wagering my capital on the outcome of share prices in the future. The time horizon may be longer than the time it takes for the roulette wheel to finish spinning but the concept is similar especially if my mindset is that I don’t really understand the company and business much and am just watching for the volatility in share prices to buy lower and sell higher.

Ultimately, if one doesn’t really understand what we are getting into in terms of investments, then we are moving closer to a gambling mentality to investing rather than true investing.

The lesson from the $26million loss by the businessman is clear. Play within your means be it investment or gambling. Do not invest (gamble) on credit. And most important of all, know your limits and when to cut loss and walk away without destroying yourself and your own life savings recklessly.

Be well and prosper.