Compare and contrast gambling and trade

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Compare and contrast gambling and trade

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What makes trading different from gambling, is trading in the stock market equivalent to gambling

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(a) β1 > 0 if underreaction. (b) β1 < 0 if overreaction. A trader – if he can just observe the emotion without getting pulled in – will buy/sell through the illogical swings and probably make a boat load of money.

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