Archive for the ‘Finance’ Category

Stock Options - Investment or Gambling?

Monday, April 25th, 2005

Yesterday I had a very long discussion with my girl friend about investment. The discussion began because I wanted to invest my money in stock options. She didn’t agree because I’ve just invested some of my money in mutual funds and their price have been going down in the last few days.
Like many Indonesian people, my girl friend thinks that investing in stocks is actually gambling. We can lose our money within 1 day! My mother has the same opinion too, she said don’t put your money in stock options; it’s like betting your money in a casino. Investing in stock options is not so common in Asian countries.

I have to admit that for some people “stocks = gambling”. Some of my friends had lost a lot of money about 5 years after the economic bubble in the US exploded. Many IT companies at that time didn’t have any value although they had a very high capital value a few months back. That’s why Warren Buffett didn’t want to invest his money in the IT companies during that period.

For me, buying stocks is actually another way of investment; just like cash deposit, real estate, gold, etc. It is a way where we can put our money to work for us; I mean we can get a profit from our money after some time. Investing in stocks is not easy, of course (if this would have been easy, then it would be easy to be rich). We have to perform thorough analysis to the company we want to invest. Looking at the financial report only sometimes is not sufficient.

As a final word, everyone has his/her own way of investing. Some people don’t like stocks because it is too risky; some others like it because they can get higher profit. My advice, invest your money in a way that you feel comfortable with…. :)