In fact, comparisons between gambling and investing abound.

In the short term, we can demonstrate this link by approximating the random stock market with the flip of a coin (click here for more info on market efficiency). Look at the two graphs to the left. We have taken one actual stock, and graphed it daily over the course of a year. For the other graph, we let a computer generate a fake, where the fictional stock has a 50% chance of increasing and a 50% chance of decreasing in price on a daily basis. Care to vote on which stock is real? Surprise, ZYX is actually KO, or Coca Cola. Thus, with the short term randomness of the stock market it should come as no surprise that many newcomers feel that investing should be relegated to Las Vegas.

As an individual investor seek to overcome this feeling, what LearningToInvest.com has termed the Gambler's Syndrome. Any experienced investor can recall their first home run. That magical moment when the stock they spent weeks researching doubles the month after they bought it. Accompanying this ephoria, however, is the urgency to sell the stock and lock in the profit before it disappers just as quickly. Everybody knows the feeling, the one you experience when you find a ten-dollar bill laying in the street. You feel guilty picking up the money as you worry that it might be your grandmother's rent money. Stuffing the bill quickly into your pocket you half walk, half run while seeking out an alley to turn down in an effort to evade any cops who might otherwise swoop down and deny you your windfall. The old saying, there is no such thing as a free lunch, roots this feeling in our consciousness. When you make a quick killing on the stock market you think you have discovered the one exception in the Universe to this rule. Looking for that alley to escape down, you race to sell the stock. As the sell order goes through, a triumphant feeling descends upon your life. You have cheated the cosmos. Unfortunately, the stock keeps rising, and you have cheated yourself!

The morale to the story; early success is often more dangerous than early failure. Many investors start out with good intentions, vowing to invest for the long term. However, a quick thousand dollars is often too tempting a reward to bet on the short-term volatility of the stock market. They decide to reinvest their winnings in the stableness of a home entertainment system. However, years later that money could have bought a retirement, instead of a long since discarded T.V. So tough it out, through those rough times when your stocks are rising like fireworks, and you will be rewarded with a steady long term return.