>> Does investment involve a purchase and some level of ownership in something which at some
>> point can be sold whereas gambling merely involves a bet on an outcome with no
>> ownership.
>>
In the case of shares, they represent a valuation of the company that includes its net assets, goodwill, assessment of earnings etc. For listed companies the relationship is not 1:1, in that the share valuation may be several times the net assets of the company and projected earnings or dividend performance can be a major factor in pricing.
For SMEs, there is no quoted share price but for my purposes if there are 100 shares and the net assets are £100,000, then each share is backed by £1,000 of assets. What those assets are worth at particular points in a business cycle is a moot point. I always discount goodwill.
Investors are usually at the bottom of any distribution of assets if a business fails.
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