This weekend, it happened again.

I try to avoid it, but once in a while, some poor unsuspecting person gets caught in one of my passionate monologues dispelling common money misconceptions.

Risks are everywhere in life, not just in the stock market.Credit: Simon Letch

To be fair, these mini-lectures are not totally unsolicited. Usually, it starts with a seemingly innocent question followed by strong (unfounded) assertions that I feel compelled to correct. Why? Maybe it was all that debating I did in school, or my law degree. Who knows?

This weekend’s topic? Investing is like gambling. Let’s put this one to bed.

The difference is not in the product but in the process. The two questions to ask are: what is the asset being bought, and why?

For example, the person betting on horses or sports is gambling. There is no asset being purchased. But if someone buys art, they own the asset – that’s an investment. Or is it?

Here, the second question kicks in – why did they buy it? Were they hoping it’d be a good investment (which is speculation)? Or did they make an informed decision about its value or potential? The difference is in the skills and knowledge of the person purchasing the........

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