Short-Term Gambling vs Long-Term Owning

By Ben Dolan, CFP®

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A couple of months ago I had an interesting conversation at a birthday party with the dad of one of my son’s friends. Having spent time chatting about school and sports, he asked me about work, and I mentioned that I own a wealth management firm. He got excited (too excited, really) and quickly began asking me about investing.

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After a few minutes, I noticed that his questions trended less toward investing and more towards speculation (or outright gambling) and the “gamification” of markets. While I very much disagreed with this gentleman about the best way to approach investing, I also know how hard it is for individual investors to understand the difference between investing and gambling. The teams that have created addictive social media have partnered with online brokers to keep investors trading, as pointed out by Hannah Erin Lang in her December 12,2025 piece in the Walls Street Journal: “On Robinhood’s platform, investors can play the prediction markets, trade dozens of cryptocurrencies and—starting sometime next year—even scroll a social media feed within the app.”

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Using algorithms/social media isn’t the only angle these platforms use to gin up trading volumes, from which they are paid commissions. They are selling a lifestyle, and the thrill of fortunes to be made if only you make the right moves on the right platform. Lang explains: “At his company’s annual summit for active traders earlier this year, Tenev compared playing the markets to circling a racetrack, where the “machine can make all the difference.” Trading, he said, was “high stakes,” and “one of the most intense lifestyles out there.” And to make his point, Tenev wore a race-car driver’s jumpsuit emblazoned with Robinhood’s logo.’”

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I wonder how differently these investors would approach markets if they could see the chart below, which outlines the annual returns of the CRSP 1-10 Index (the entire US Stock Market) from 1926 through 2024. During the period, markets were positive 75% of time, and negative 25% of the time.

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While none of us can predict the future, we should take comfort in the history of being business owners in a capitalist market. When you focus on the long-term, you put the odds in your favor. When you gamble, the house always wins.

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THE REWARDING DISTRIBUTION OF US STOCK MARKET RETURNS - Past performance is no guarantee of future results. Investing risks include loss of principal and fluctuating value. There is no guarantee an investment strategy will be successful. Indices are not available for direct investment. Index returns are not representative of actual portfolios and do not reflect costs and fees associated with an actual investment. In USD. Return in 1970 was 0.002%. CRSP data provided by the Center for Research in Security Prices, University of Chicago. The CRSP 1–10 Index measures the performance of the total US stock market, which it defines as the aggregate capitalization of all US securities listed on the NYSE, NYSE MKT (formerly AMEX), and Nasdaq Global Market. Dimensional Fund Advisors LP is an investment advisor registered with the Securities and Exchange Commission. Investment products: • Not FDIC Insured • Not Bank Guaranteed • May Lose Value Dimensional Fund Advisors does not have any bank affiliates.