First- an important note. We remind you that on November 13th, accounts will transition from National Financial Services to LPL Financial. Nothing will change about our relationship with you. We remain independent advisors and feel that our partnership with Commonwealth and LPL continues to be appropriate for you and us. Please let us know if you have any questions or concerns.
In other thoughts…
One of our pet peeves is when we hear investing compared to gambling. Investing and gambling are very different pursuits. Investing is associated with identifying opportunities to use our capital to help the economy grow by participating with companies and other entities. We take equity (buy stock) or lend money (buy bonds), providing capital that helps those parties pursue their goals. If they are successful, we participate in that success, creating a win-win relationship.
This is quite different from gambling, and we are extremely concerned about the rise of sports betting, as well as its cousins, prediction markets like Kalshi and Polymarket.
This CBS story discusses the financial toll of sports gambling, profiling one man who is addicted to the activity. The video story and interview are found at the link above. His case may be extreme, but even lower-level gambling behavior can be problematic. There is concerning evidence of a relationship between legalizing sports gambling and increased diagnoses of Gambling Disorder.
Part of the challenge is the ease of gambling. What once required a visit to a physical location can now be accomplished in minutes using a convenient app. It has always been possible to borrow money for gambling, but electronic banking allows an even more direct path between credit and casinos. The industry says it provides responsible gambling tools, but those are at odds with how the gaming is structured, not to mention the significant incentive to keep customers active on their platforms.
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Like other potentially addictive behaviors, overconfidence is a common variable. “I’m in control,” or “This is an innocent pastime.” For many people, this will be true. For those who become addicted, it is a convenient lie. Even more pernicious is “I can get out of this hole,” leading some to add to losses rather than walking away from a bad thing.
We loved statements by French soccer superstar Kylian Mbappe, when he explained why he would not take money from betting firms:
“Sports betting is destructive. It has ruined the lives of some people I know. That’s why I refused to appear in sports betting advertisements. Many of us come from the suburbs, and it destroys the lives of countless people there.”
Gambling, especially on these new platforms that make it so easy, is entertainment masquerading as financial opportunity. Investing is very different. Gambling transfers wealth (often yours to someone else) and investing allows us to participate in the creation of wealth.
Building wealth is not about making a big score. It comes from consistently making good decisions and allowing productive assets to potentially grow over time.
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Here are some other things that caught our attention:
- We’re in the 4th quarter now and it will be a busy one! Chris Fasciano has a helpful rundown on the LPL Research blog. The first item, on the election, is a great reminder.
- The rate of defection from North Korea is near its lowest levels ever as the regime has become more successful at keeping its citizens in the country.
- Be careful with this one, as you could easily spend hours here. Fullsets.fm is a place to find complete concert sets, including videos. We enjoyed this Avett Brothers concert from Lollapalooza 2014.
- The fattest bear of the season is “Backpack.” A season of salmon-snacking has Backpack looking solid.