There's an old saying, "A lottery is a tax on people who are bad at math." I'm inclined to agree with this. I'm pondering the recent record-breaking multi-state "Big Game" drawing that's been in the news all week. Apparently, two people split the jackpot, 72 others got a smaller amount of money, and somewhere over 70 million people (70,000,000) lost every dime they put into the thing. And this is considered a positive outcome. Okay... Right. Ummm... Why?

I can just see the advertising slogan for this: "Come, be one of over 70 million people to lose money." And most of the participants apparently bought multiple tickets, so they could lose more than once.

I bought a lottery ticket once, during a bad thunderstorm in Florida. It was an impressive storm with a lightning flash every two or three seconds, and I was standing under the overhang in front of a supermarket afraid to go out to my car for fear of getting hit. After pondering this for a while, I went back inside and bought a lottery ticket, on the theory that my chances of getting hit by lightning were about the same, and since I was seriously taking THAT into consideration... It was really something to do to pass the time until it stopped raining. It was that or a candy bar, and I wasn't hungry. I never actually bothered to check the thing to see if I won anything.

I suppose this recent drawing made slightly more sense than the standard "pick three" lotteries they run just about every night around the country. With pick three, your chance is one in 1000 of winning \$500. This means if you buy a ticket for every single number (which is not just possible but actually feasible), you're guaranteed to lose exactly half your money. You can see why people get addicted to this, can't you?

At this point, psychology students will bring up rat-based research into operant conditioning via random rewards. (Does the name Pavlov ring a bell?) What I can't figure out is whether they're simply pointing out the similarity between a one-armed bandit and a randomized pellet dispensing machine, or if they're really saying there are a lot of people out there with the brains of a rat. Stop and think about it, Las Vegas and Atlantic City have huge palatial buildings like the "Taj Mahal," built and run by the money people lose gambling in them. Yet people who know this still go and bring fresh money to feed these places. Thousands of them, every day.

The thing a lot of people don't understand is that investors, on the whole, aren't trying to "beat the odds." We only play games where the deck is stacked in our favor. If more than half the people involved lose money, what they're doing probably does NOT qualify as investing.

Investors are closer to farmers than gamblers. We plant money like seeds, and wait patiently to harvest the crops. Ironically, the markets that investors set up to sell the products of their investments (i.e., shares of ownership in ongoing profitable businesses) have attracted gamblers setting up zero-sum poker games of day-trading those shares. But day traders aren't investors. Not even close.

Unlike a lottery, it really is possible for everyone who invests in stocks to come out ahead. It's not guaranteed any more than a farmer is guaranteed a good harvest when he plants each crop. But with a little caution and diversification, and a lot of patience, a drought or market crash doesn't have to bankrupt anyone. And a bunch of little wins are a lot easier to come by than a big jackpot.