Cocktail party and water cooler investing conversations are incomplete by their very definition. As humans, we like to look good and appear intelligent to our peers. This leads us to share our winners but not necessarily our losers. It would not be uncommon for a friend who made three or four big bets to only tell you about the one or two that paid off. You do not have access to the investing records of friends at a party or the talking heads on financial television shows. If you did, you could calculate their overall long-term returns. You would likely not be impressed.

Another downside of making frequent bets by changing your portfolio holdings frequently is that it introduces additional costs. These may show up in the form of trading commissions or bid-ask spreads. It also commonly shows up in the form of additional taxes due from unqualified dividends and short-term capital gains. These costs produce a drag on long-term portfolio returns that can add up over the years.

Recent outperformance of the most well-known stocks in the world (Facebook, Tesla, etc.) has led many investors over the last year to adopt a gambling mentality. New app-based brokerage companies such as Robinhood encourage the trend by making investing feel like a game. The closure of casinos due to COVID-19 and more people sheltering at home have likely accelerated the trend. Day trading seems to be back in vogue as it was during late 1990s until the tech bubble burst.

None of this should matter to the long-term investor. Investing is not supposed to be fun. It is supposed to be boring. It is a critical, lifelong task to ensure financial security for yourself and your family, not a lottery or source of entertainment. Some investors attempt to control their gambling tendency by assigning 5 percent of their portfolio as “play money.” This is unlikely to do much harm, and if it helps them to stay the course with the rest of their portfolio, it may even assist them in reaching their goals. However, investors need to realize that investing is serious business and playing with any significant portion of their portfolio can have a serious impact on the length of their career, the freedom they have to pursue their dreams, and their standard of living during retirement.

Index funds own all of the stocks in the market, both the good and the bad. Perhaps it might help your mental FOMO when you hear about a friend’s good fortune to comment, “Oh, yes, I own that stock as well. In fact, I have owned it since 2006 [or whenever you first started investing or the company went public].” The advantage of index funds is that they guarantee you will achieve the market return. You will never underperform the market, unlike the 80 to 90 percent of active mutual fund managers who will do so over the long term. And that’s before tax. The record of individual investors is even worse than that of professional investors. In fact, studies are clear that the more an investor trades, the lower their long-term returns are likely to be. Just like a casino, the fewer trips your money makes through Wall Street, the more of it you are likely to keep. In essence, it is not the buying of the shares of profitable companies that is gambling—it is the frequent trading of those shares. When you buy and hold shares of the most profitable companies for the long term, you will receive your share of their earnings. That’s investing, not gambling, especially if you spread your bets across all of them using an index fund.