Question

Critically evaluate the following statement: Playing the stock market is like gambling. Such speculative investing has no social value, other than the pleasure people get from this form of gambling. Provide real world example.

Answer 1

I personally do not agree with this statement because playing the stock market by speculation is not gambling and it is about finding out the direction of the market by proactive assessment of economic scenario and it can lead to making of excessive return if one is adjudged right.

Speculative investing is highly promoted in form of derivatives in stock market and they will be helping the individual in order to decide the direction of the stock market by continuous interaction of the demand and the supply and the speculative markets are not just based upon any random ideas but they are based upon theoretical backing which will be having fundamental economic changes and other stock related specific changes which will be leading to higher rate of return and higher participation in the market.

in real-world derivatives market can be helpful in order to find out the synchronisation of the stock market with the real economy, as we can say in the case of 2008 crisis there a trader named Michael berry, Who bet against the rising housing prices and he made money for his clients.