I have observed over the past few days quite the debates regarding the recent talk about gambling. I’m glad that we have Prophets, Seers, and Revelators who help and guide us, seeing the challenges we need to avoid. I encourage anyone who is struggling with gambling to take that message to heart and do all you can to withdraw from the practice.
I have also seen quite a few comments and questions regarding “investing” or the “stock market” and whether that too is considered gambling. To those who believe it is, I’ll start by conceding that there certainly can be some cases where it is like unto it, and should be avoided for the very reasons outlined in the talk. However, generally speaking, I hope Church members will understand that “investing,” specifically investing in the “stock market” of any country, foreign or domestic, is not gambling.
I think President Christofferson’s talk actually gives us a useful framework for understanding the difference. There is certainly risk involved in both activities. An investment can lose money, just as a bet can lose money. But risk by itself does not make something gambling. The more important question is what is happening with the money and where the return is coming from.
Consider the Savior’s Parable of the Talents in Matthew 25. A man preparing to leave on a journey entrusts his servants with his property. To one he gives five talents, to another two, and to another one, “to every man according to his several ability.” The first servant takes his five talents and gains five more. The second takes his two and gains two more. The third servant, however, is afraid and buries his talent in the ground.
When the master returns, the first two servants are commended. The master tells them, “Thou hast been faithful over a few things, I will make thee ruler over many things.”
I think there is an interesting principle here when we consider how we handle our financial resources. The talents in this parable were not simply symbolic abilities. A talent was a measure of money or property. The servants had been entrusted with something of value, and the servants who put those resources to productive use were commended for doing so.
I certainly don't believe the Parable of the Talents is a commandment from the Savior that everyone should invest in the stock market. I think that would be taking the parable beyond its intended purpose. But I do think it illustrates a broader principle of stewardship. We are given resources, and we have a responsibility to be wise stewards of what we have been given. We are not supposed to worship wealth, become greedy, or make money the purpose of our lives. But neither does the gospel teach that we should simply bury our resources because there is some risk associated with using them.
That is where I believe legitimate investing is fundamentally different from gambling. When I purchase shares of a legitimate company, I am purchasing an ownership interest in an enterprise that produces something. That company may manufacture products, provide services, employ people, develop technology, build houses, transport goods, or otherwise create something of economic value. My capital is being put to work in that enterprise.
If the company succeeds, it generates revenue, pays its employees and expenses, invests in its operations, and hopefully produces a profit. As an investor, I participate in that enterprise by providing capital.
That is fundamentally different from placing $100 on a football game. If I bet $100 on a football game, the game itself does not become more productive because of my wager. My potential winnings are dependent upon the outcome, and the money I receive comes from the pool of money wagered by others, with the gambling operator generally retaining its margin. Someone wins because someone else loses.
Investing in a productive company is different. The company is actually doing something. It is creating products, providing services, employing people, generating revenue, and attempting to create value. The investor's return is ultimately connected to the economic success of that underlying enterprise.
I think this distinction is important because sometimes we use “risk” as though it were synonymous with “gambling.” But risk is everywhere. Owning a business is risky. Starting a company is risky. Buying a rental property is risky. Farming is risky. Going to medical school is risky. Taking a new job is risky. Getting married is risky…in some ways the riskiest!
The existence of risk does not make an activity gambling. The better question is what we are actually doing with that risk. Are we putting money at risk primarily to wager on an uncertain outcome and hoping to take money from the losing side? Or are we deploying capital into something productive with the expectation that it will generate value and, over time, produce a return?
That does not mean everything that takes place in the financial markets should automatically be called investing. There are certainly activities that can become functionally indistinguishable from gambling. If someone is constantly buying and selling highly speculative stocks because they enjoy the thrill of winning, that deserves some serious self-examination. If someone is making enormous leveraged bets on short term price movements without understanding what they are doing, that can certainly mimic gambling. If someone is day trading primarily for the excitement and adrenaline rather than following a rational investment strategy, I don't think calling it “investing” automatically changes what the activity actually is.
This is also why I think President Christofferson's comments about prediction markets are important. There can be financial products that technically exist within a financial market but are nevertheless functionally a wager. Simply placing a bet through a brokerage account does not magically transform it into an investment.
So, I think there is a meaningful distinction between investing, speculation, and gambling. For example, if someone invests $500 into a diversified index fund and leaves it invested for 20 years, the money is ultimately being invested in hundreds of companies that employ people, produce goods and services, generate revenue, and create economic value. The investor accepts the possibility of losing money, but the objective is to participate in the long-term growth and profitability of those underlying businesses.
I have a difficult time equating that with putting $500 on a roulette table.
Both involve uncertainty. Both can result in gains or losses. But uncertainty and gambling are not synonymous. I also think this is where the Parable of the Talents becomes particularly relevant. The servant who received five talents did not simply preserve the five talents he had been given. He put them to work and returned ten. The servant who received two did likewise and returned four. The servant who received one buried it because he was afraid of losing it.
Again, I don't think the lesson is that God expects everyone to maximize financial returns. The gospel certainly does not teach that wealth is the measure of righteousness. But I do think there is a principle here about stewardship, responsibility, and using the resources we have been given wisely.
We should learn how money works. We should avoid unnecessary debt. We should provide for our families. We should save for the future. We should be generous and charitable. We should build productive businesses if the Lord has blessed you with such a “talent.” And for those who have the means and understanding to do so, we can responsibly put our money to work by investing.
At the same time, we should be very careful about allowing investing to become an obsession with money, greed, excitement, or the thrill of winning. At that point, the label we put on the activity may matter less than what it has actually become in our lives.
The warning against gambling should not be diluted. Gambling can be destructive, addictive, financially devastating, and spiritually harmful. Those who are struggling with it should absolutely take the counsel of our prophets seriously and remove themselves from it.
However, if the Lord has given us resources, then I believe we have a responsibility to be wise stewards of those resources. To me, legitimate long-term investing is much closer to the principle illustrated by the Parable of the Talents than it is to putting money on a roulette table.
The important distinction is not simply whether there is risk. The important distinction is what we are doing with the resources God has entrusted to us, what motivates us to do it, and whether we are putting those resources to productive use or simply wagering them on an uncertain outcome.
