I once heard a man say that all arguments eventually devolve into a discussion about the definitions of words. I think there is much to that. The English language has many, many words in it that have multiple definitions. But sometimes we talk about the subject as if a word has but one definition. Take ‘war’. The ‘war’ in Iraq as a first definition ended after about 2 days, that is, as a battle between standing armies of different nations. We now talk about the ‘war’ in Iraq, but we use the second definition, i.e. a conflict between parties. A serious and deadly endeavor to be sure, but not a ‘war’ under the primary definition.
This also has a tendency to happen in investing, with some unfortunate consequences. The first definition of gamble (in my Webster’s) is to “play a game of chance for stakes”, the second definition is “an act having an element of risk”. People will blithely talk about stocks being a ‘gamble’, but are not clear about which definition they really mean. Heard often enough, some will decide that buying a stock is essentially a game of chance, because stocks are a ‘gamble’. Is there risk? Yes. Is it a game of chance? Most certainly not.
Or look at the word ‘risk’. Most average people would define risk in an investment as the possibility of having a loss. But many investment professionals define ‘risk’ as volatility or price movement. A stock that moves up and down frequently is ‘risky’ by that definition, regardless of how outstanding and profitable a company it may be. These people will talk with customers about reducing risk. What they mean is to reduce volatility relative to the S&P 500. That is quite a different thing.
When you are speaking with someone about investment or finance, ask them to be clear about defining their terms. When talking about your money, you don’t want to have a misunderstanding because the same word in English can mean many different things.