It’s often remarked that the stock market is the world’s biggest casino, but actually it’s worse than a casino. When you walk into a casino you can readily predict the odds of success. For example, a roulette wheel has 38 slots but only pays 35-to-1 for a bet on a given number, so over time you will lose, albeit slowly. When you invest in a stock, however, the odds are not that predictable, although billions of dollars are made by financial “advisers” who have convinced folks otherwise.
As pointed out in The Fortune Sellers, the way to improve your odds in the market is to ignore all those charts and stick to fundamentals: Is the company financially healthy? Does it have proven management? Does it serve a growing or in-favor market segment? Etc. Therefore, if you want to gamble in the stock market, throw away all that charting software and instead invest a lot of time doing fundamental research. Plus, invest in market areas in which you have some deeper knowledge.
Although the intent of this blog is not (and will never be) to offer specific investment advice, an example of a stock gamble that this conservative and science-minded engineer will make is ChromaDex, a small company that’s at the forefront of providing natural-food-based alternatives to standard drugs that all too often have horrible side effects. I’ve followed the natural foods/supplements industry for decades, and believe that the ChromaDex business model makes good sense.
(If you’re curious, please see “Near-Term Catalyst Could Drive ChromaDex Shares Higher.“)
p.s. I’m prepared to lose all of my “investment” on my educated gamble.