The Major Difference Between Wall Street and a Casino

Jason Zweig’s been making the media rounds this winter to promote his hilarious new book, The Devil’s Financial Dictionary. I’ve been giving the hardcover copies as gifts to everyone I know.

Jason had a conversation with his old WSJ colleague, Matt Phillips (now at Quartz) about some of the main points of what he’s trying to do with this biting satire of the investment business. I really liked this bit about how, in this particular casino, the rules for winning are the polar opposite of the Vegas rules for survival:

But the fact that [Wall Street] has aspects of a casino does not mean you shouldn’t play. Because Wall Street resembles a casino in a lot of ways, but there’s one important way in which it doesn’t.
In the casino the single most important principle is what casino operators call TOD, “time-on-device.”
And from the minute you walk in the door in Las Vegas or Atlantic City or wherever you happen to be casino gambling, the people who run the casino have only one objective, which is to keep you glued to whatever game you’re playing. Because if you give one pull to the slot machine you might hit the jackpot. And if you just take your money and leave, you’ve just hurt the casino a lot. But almost nobody takes one pull, hits the jackpot…

…and leaves.

Nobody does that. And there’s a reason why. Because maximizing the time-on-device is terrible for you and it’s great for the casino.
Wall Street works the opposite way as long as you have a long-term perspective…If you’re a long-term investor, you should maximize your time-on-device. You should buy a diversified portfolio of low-cost funds and hold them your entire lifetime.

So you’ve participated in the casino but you’re not pulling any levers. You’re just watching.

Check out the whole discussion at the link below. And buy the book! 


Jason Zweig on Wall Street’s big lie (Quartz)

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