What I learned about gambling as a stock market investor...

[BigDog]

As a successful day trader in equity options, I have often been confronted by people who consider my livelihood of 12 years to be simply gambling with my money. Being somewhat of a novice to the art of sports gambling, I have come to the realization that their are many similarities and vast differences. The differences may bore most of you. However I find the similarities to be striking. I am quite certain that my rapid success at sports gambling (of course, success is a relative term ... I can usually average 57% to 60%) is mainly due to my many hours of studying market mechanisms. Maybe what I learned about day trading will help you guys in gambling too. Here are the similarities from a horses mouth:

1. Playing Trends - The trend is your friend. No one can pick the beginning or end of a trend...not in stocks, not in winning streaks. Buying low and selling high is a clever theory, but it's only practical in the middle spread. Who picked Seattle's first of 15 straight wins? Nobody. But after the first 7 or 8 games I guarantee I was on them every game. I will continue to bet on them every day until their "trend" changes. Who stopped betting on them before they lost this last game? Nobody, including me. I lost with everyone else. But has their trend changed? I don't know yet so I will continue to wager. If they lose 2 or 3 in a row, or they lose 3 out of 5, then I would no longer play them daily. Instead I would analyze each game more diligently. So too is the mind of the market. As a stock rises week after week, I may jump on it and ride for the last part of the rise. If it's trend reverses, I am outa there! Maybe I'll get back on at a later date, but my ride is at an end. I have even heard of people not buying a rising stock because it's "too high" and they're waiting for it to come down. Why the hell would you want to buy a stock that was coming down! Jeesh! Would you NOT bet on Seattle because you're waiting for them to lose a few first? That's plain stupid. So I may miss the first half of the ride, but I'm happy with the last half.

Some of you may remember my thread on betting on Philladelphia every day and betting against Tampa Bay every day. At the time, Philly had been flying high and Tampa Bay couldn't hit the side of a barn. I played these two for over a week. Then, Philly started to lose a few games. Tampa Bay started to win a few games. So I jumped off those "investments" and ended up somewhere around 10-4(71.4%). Philly is still a good team and Tampa Bay is...well, even a blind squirrel gets an acorn every now and then.

I will write up another similarity later.

Dave

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If you're not the lead dog, your view never changes.

 

[JT Sneaks]

Nice post, look forward to more

JT

 

[Nolan Dalla]

Very solid post, BigDog. Looking forward to reading more of your thoughts.

-- Nolan Dalla

 

[Steal]

With background in Finance and Investments, I enjoyed the write-up and wish you the best.

 

[prospector]

very enlightening BigDog

(might be time to starting shorting Cleveland i think)

thanks

 

[JohnWise]

Interesting.

 

[TORONTO-VIGILANTE]

i'll never get bored of stock market/sports capping analogies.
good write up.

 

[KotysDad]

Your thread got me to thinking about trends so I thought I would look back at this years games played so far. Consider the following betting strategy: When a team has won 3 straight games, start betting on them until they lose. When a team loses 3 straight, bet against them until they win. The following numbers represent the W-L record for each team if you had bet with that strategy.....

Team .....bet on......bet against

Balt......2-3.........4-3
Bost......5-5.........0-2
NY........2-6.........2-3
TB........0-0.........11-7
Tor.......1-3.........5-2

Chi.......5-4.........9-6
Cle.......11-5........0-1
Det.......3-5.........11-4
KC........0-2.........7-7
Min.......6-4.........0-1

Ana.......3-3.........2-2
Oak.......5-3.........5-3
Sea.......24-6........0-0
Tex.......0-1.........7-6

A.L......67-50........63-47 (57.2%)

Atl......3-1..........0-2
Fla......1-3..........2-3
Mon......1-2..........4-7
NY.......0-1..........7-6
Phi......6-7..........1-3

Chi......13-6.........5-2
Cin......4-3..........6-7
Hou......5-4..........4-4
Mil......2-5..........3-3
Pit......0-1..........10-7
StL......9-3..........2-4

Ariz.....9-4..........1-1
Col......4-6..........3-4
LA.......4-5..........0-3
SD.......5-5..........8-6
SF.......2-4..........1-4

N.L......68-60........55-65
(.531) (.458)

Couple of notes on the data:

1. If you throw out Seattle, then the American League is close to .500, more in line with the National League numbers.

2. You cant throw out Seattle because they are part of the data

3. Some teams are more streaky than others, i.e. Tampa Bay, Toronto, Cleveland,Detroit, and of course Seattle in the American League. IN the NL, streaky teams are Cubs, Pitt, StL, and Arizona.

Conclusions: If you believe teams are streaky for a reason, and believe their trends will continue, then apply this strategy on only those teams and forget the rest.

Keep in mind that these figures dont account for the actual odds. I have no idea what the odds were on all these games, so I cant make any further conclusions based on that.

Anyway, thought this might be of interest to some given the topic. I was bored tonight obviously and decided to do a little homework

I might play with this strategy a little for awhile to see how it goes.

 

[beertime]

i may be off base but ABSTRACT LOGIC is what i see and im a subscriber myself.its a rolling factor i think and if kept under control can be effective.
seein koty's stats .... i do the same type stuff but with lines etc..
i dont type great so just thought id chime in and say im one of those guys diggin around for dirt aswell.

theres no free lunch but ill dig through the dumpsters now and then...good luck

 

[pepin46]

they are both an art for the professionals and a gamble for neophites.

and then, some of us are in-between.


pep

 

[sweatbet]

Very interesting topic, everyone has diff. opinions on trends, I like the comparison to the market. Also, appreciate the stats Kodtsdad.

 

[iusam]

Very interesting post, Big Dog. I was studying the Elliot Wave Principle and became fascinated with applications involving human behavior. I began trying to apply some of the concepts to baseball, although its harder to figure ratios, etc. While I have done enough to realize that the Elliot Wave Principle is not the complete answer (for baseball or the market) it did lead me to start working on a cycle theory. Instead of waves that continously progress overall as Elliot proposed, I think that the variations (trends) all tend back towards the norm, kind of like sound waves centered on a flat line (expected behavior). Taking advantage of it involves looking for trends as you suggest, but also looking for keys that might indicate turning points. That might be an unexpected win or showing (D-rays) or an unexpected couple of losses (like I'm looking for with Seattle). The trends also extend well beyond the team level to starting pitchers, main offensive players, home/away, etc. Also, expect teams/players to do what they have done(thanks MadJack's!). I like to try to handicap based on situations as close as possible to the current one.
Keeping these things in mind and reevaluating after every game have enabled to have my best year ever, far and away.

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0,0,1,2,3,5,8,13,21....

 

[TDP]

Wow, you guys are blowing my mind. More importantly your expanding my thinking. Thanks, good luck and will be paying attention.

 

[hand]

Definetly a great post!Anything that adds to the data when capping is a positive.Streaks are part of what I look at both good & bad.They can be stronger than ERA's when capping.Another thought branching off of this,Riding hot streaks with cappers.Like teams,cappers get hot & cold,I hate to say this but sometimes fading can enter in to my thinking(Hell sometimes I think about fading myself

)I asked Nolan about going opposites when on a down turn & he said he would get back to it.So look for it in the future.

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United we stand. GLTA, Hand

 

[Take Two ?]

BIG DOG - The heck with Phillies and Tampa Bay.

I have noticed some similarities too, and your post was most interesting.

BUT - What STOCKS do you like right now in this mess of a market????

TT

[This message has been edited by Take Two ? (edited 06-14-2001).]

 

[scrubbo]

If a trend philosophy is being used there has got to be a consideration of personal trends along with team trends. For example:
If a middle of the road team, like St. Louis,
wins 4 in a row but is facing a pitcher, like Randy Johnson, whos won 7 in a row which way do you go? Do you look at whos pitching for st loo and see what kind of value you'll get against Rj or go with the hot pitcher.
Can this system work if teams like Pitt, montreal and Tampa bay are excluded? If so, where would you draw the line between Pathetic and bad teams.
Just some food for thought. Great thread

 

[Randercity]

Taking KOTY's theory a little further... AGAIN, NOT EXACT, but approximate here. I'm going to use those teams that are at or about .500 to BET ON, and against those that are at or under .400

Bet on after winning 3:

Balt......2-3
Bost......5-5
NY........2-6
Tor.......1-3
Chi.......5-4
Cle......11-5
Min.......6-4
Ana.......3-3
Oak.......5-3
Sea......24-6
TOTALS 64-42 (60.4%)

Bet against after losing 3:

TB.......11-7
Det......11-4
KC........7-7
Tex.......7-6
TOTALS 36-24 (60.0%)

Granted, many of these matchups probably involved playing one another, causing the numbers to vary. Also, with most, how much JUICE would you be laying?? Would hitting 60% of these plays bring a profit??

Now to the NL!

Bet on these after winning 3:

Atl......3-1
Fla......1-3
Phi......6-7
Chi.....13-6
Hou......5-4
Mil......2-5
StL......9-3
Ariz.....9-4
Col......4-6
LA.......4-5
SF.......2-4
TOTALS 58-48 (54.7%)

Bet against after losing 3:

Mon......4-7
NY.......7-6
Cin......6-7
Pit.....10-7
SD.......8-6
TOTALS 35-33 (51.47%)

Doesn't tell a whole lot... guess its best to do as mentioned, follow those teams that tend to be streaky.

 

[Unknowncomic]

WOW, Thats some great stuff.
Soon to be in paperback ?
Keep it coming.

 

[BigDog]

I do not know that I would consider 4 wins to be a trend for a STL type of team, especially if it was a 4 game series against a Pittsburg or a Texas or a Kansas City. And I consider a teams trend to be a culmination of personal trends. But teams that are like Minnesota or Seattle or Arizona would be most likely to continue a 4 game winning streak. I am not advocating betting on a team JUST BECAUSE they have a streak going anymore than I would buy a stock JUST BECAUSE it is rising. You first have to find a nice solid performer and THEN take advantage of the streaks. A 40-21 team is more likely to have 7 or 8 game winning streaks than a 28-34 team. Likewise, a 15-45 team will have a greater chance of extending a 4 game losing streak.

Look at Seattle or Tampa Bay. I believe Seattle has now lost 2 out of their last 5. Tampa Bay has won 3 out of their last 5. Now this doesn't mean I will not play Seattle to win or Tampa to lose, it means that I cannot use the trend as a determinant. Because of the last 5-6 days am I leary of betting against Tampa Bay? Yup! Am I a bit more cautious in analyzing Seattle before I bet on them again? You betcha!

There are other fish in the sea and I'll catch one of those instead.



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If you're not the lead dog, your view never changes.