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Guest Blog from @sholdsworth1963 on Gambling

12/10/2017

4 Comments

 
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My mate Steve kindly offered some thoughts on Gambling as a supplementary activity to messing about with Stocks via an email and he very kindly agreed to the text being used for a Guest Blog because I am sure many Readers will find this useful. I have had to slightly edit it to protect the innocent but it is well worth reading - particularly because it makes some excellent points about the risks and how Steve in effect ‘compartmentalises’ his Gambling and Investing activities.

Thanks Steve !! 
WD.


Hi Pete,

When I saw on Twitter that you were working on a draft blog about horse racing, my interest was immediately aroused, and judging by the number of responses you got I am far from the only one! Here are a few thoughts of my own:

I will start by saying that I regularly enjoy a small flutter on the gee-gees (and occasionally on other sports) and have done so since I was old enough to legally enter a 'betting shop', as they were called in those days.

The similarities between investing and gambling are several, and not that hard to see, but for me there is one overarching one: The vast, vast majority of both investors and gamblers do so in an attempt to make money in a way that doesn't involve selling their time or labour in conventional work.

So those investors who sneer at gamblers as being 'mug punters', and those gamblers who view investors as 'wide boys', perhaps want to look in the mirror!

My late father always enjoyed a bet. Not to excess, but as a kid I remember that every Saturday he would have a flutter or two, and my mother wasn't averse to it either. Even at the age of 81 she still has the odd bet - usually if the likes the name of a horse that is running in a race being televised on Channel 4 Racing (probably with more success than I do, but I digress...)

My mum jokes that I have inherited dad's 'gambling gene'. Whether or not such a thing exists I don't know, but I too, as I mentioned above, like a gamble. The point I am very slowly getting around to is this:

Whenever I get the urge to gamble, I will do so by having a couple of quid each way on some nag in a maiden fillies stakes in Ayr or something. By doing that, I am not tempted to apply that urge to my investing, on which I can focus solely on the purpose of making money.

I am under no illusions here. Overall, I lose money on the horses, i.e. I am the typical 'mug punter' I mentioned above. But that's fine - it's a hobby, a vice - so is drinking beer and I don't make money from that either!

It's a tiny fraction of a percentage of what I make on the stock market.

I know many people who have made a lot of money on the stock market over a sustained period of time, but I don't think I have met anybody who has done so by betting on the horses. I can think of at least two reasons for this:
  • (a) Neither is a zero-sum game. Companies exist (primarily) to create wealth for their owners, i.e. you and I. Obviously there are many things such as dealing costs and director fees that counter that but I think that in principle at least it holds true. On the other hand, bookies exists to make money for their owners, so we as punters are on the wrong side of the counter. Who pays for the upkeep of those betting shops and websites? We do, of course. (I won't address here the merits or otherwise of investing in a bookmaker.)
  • (b) My stockbroker doesn't care if I make money on my shares or not, as he makes his money on the commission he charges me. If anything he probably wants me to be successful so I'll buy more shares and he can charge me more. Conversely, if any punter starts showing signs of consistently taking money from the bookies, they will simply close his account or restrict his stakes to tiny amounts.

Another thing that investing and gambling have in common is the prevalence of the dreaded 'tipster' - those 'experts' who like to think they have some sort of superior knowledge, and often get paid for sharing that knowledge, but in practice know ****-all more than you or I do!

Then there are those people who day-trade stocks or the dreaded 'binary options', and those souls who pump money into those equally dreaded FOBTs (Fixed Odds Betting Terminals) in the high street bookies. Another parallel that I shall not attempt to address further here but I think it's obvious enough.

Finally, both investors and gamblers need to know that there are a lot of less-than-honest people in both fields. We all know about insider dealing and the dodgy practices and outright frauds on the AIM market in particular. Similar are the 'non-triers' in horse racing, when jockeys are instructed to deliberately run a bad race in order to get a lower handicap mark or longer odds for their horse next time around. In these respects, I would offer that the FCA and the Jockey Club are neck and neck in the Chocolate Teapot Stakes when it comes to enforcement!

Sorry for such a long and rambling email - it shows how much your tweet got me thinking!

All the best,

Steve
@sholdsworth1963
4 Comments
Mr catflap
12/10/2017 11:24:48 pm

This racing analogy keeps going on and on....

May I add something I remember Terry Smith (of Fundsmith) said in a Telegraph article?

He says he does not seek to pick winners. He waits until he knows who has won the race and then places his bet!

According to Smith, the bookmakers (stock market) continues to offer us odds against the winners winning long after the race has won. Cant disagree really, his fund has done very well.

Reply
WheelieDealer
18/10/2017 12:23:55 am

Hi Mr catflap - thanks for your comments - I think there is a lot of sense in what Terry Smith says and his success with his Fund backs that up. There is a school of thought saying you need to leap on things and bank fast gains (which can perhaps work well) but also I find that I can take plenty of time to investigate a Stock and then buy it but still have loads of Upside as long as I buy Quality at a decent Price - QARP if such a concept exists !!
Looking forward to that Beer on Friday - Pete

Reply
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17/1/2018 08:13:00 am

Have you ever used the easy pick numbers to play the Powerball? I am going to take a wild guess and bet you have. However, If you have not played the Powerball using easy pick than you could be missing out on the biggest opportunity of a life time.

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buyfootballtips.net link
18/2/2020 03:59:26 pm

I now buy football tips and I have found a website that works and gets me big winnings.

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