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Days at premium. Days at NAV. Days at discount. The current total expense ratio is 0. On the New York Stock Exchange. Select Broker. Fact Sheet. Summary Prospectus. That adaptation causes changes in the lines, causes changes in the way in which you might exploit any value you would find. Steve Yeah. Those few trends and systems like teams all blowout losses or shutout losses historically do cover about 60 percent of the time in their next game.
If you get embarrassed even in a preseason game, that coach normally wants to show better in the next outing. So there are some systems that have held up for decades that I use. You could find under the radar information from local Internet and newspapers in the pre-dawn era of the Internet that was not being factored in by the average bettor or by the oddsmakers. And the analogy I always use is paralysis from over-analysis.
And I knew when I started looking at the investing world a decade ago I did not want to have to handicap the financials, the fundamentals. Maybe you get an IPO. But the point spread is different. Yes, they want balanced action. So there is an opinion line. Every point spread is still an opinion at some point by somebody setting it.
You have your bets. You have a vig. You have a cost of betting. Is that a correct assumption? Or does there a market maker, so to speak? Is the bookmaker actually taking action and hosting that on their books as maybe back in the day a trader would, right? So traders trying to balance the books and will hold an inventory. How does that work in the betting world? Some of them were illegal and underground just like bookmaking shops.
So it really has been the wild, wild West. And that of course is one of them. The bookmakers get it right or they get it wrong, could make a big difference. They get the number wrong, the professional sharp bettors like myself are going to hammer it. That breaks up, by the way, to four and a half percent house edge. The investment plus the win. So that comes out to four and a half percent. So the house edge is very small, four and a half percent.
Craps with optimals play is less than one percent. So on the surface that sounds good, four and a half percent. So sportsbooks have a lot of risk. The Super Bowl Sunday is more than they might take in in all sports that month.
So they have a bad Sunday in the Super Bowl, they could have a losing February, despite all the other months of the year. And also I imagine the variance is quite high as well for these guys, is it not? You can always say is it efficient or is it accurate. The NBA has some points on average scored and their totals every point you get is worth anywhere from two to four percent in edge. But they hardly ever get balanced action. So almost every game every night the sportsbooks have a liability on one side or the other.
Mike My wife constantly points that out to me when we do our annual football picks. The half point actually comes into play. Steve Well, something to keep in mind about football because this is a great example. Football unlike any other sport has key numbers because of the way scoring occurs.
You can make a slight statistical argument from research that the number seven in basketball, obviously football, but in basketball seven some people feel is a slightly key number because it makes a difference when teams start fouling or not with a couple minutes to go to try to stay in contention.
So a slightly more statistical amount of games do land on seven in the NBA and college hoops maybe than other numbers, but not enough where it really matters. So three point games are very common. Seven point games are very common. And it has switched a little bit in the NFL, by the way, because teams go for two more now.
But the other side of that is that a dead number like five happens more now in the NFL because teams might go for two instead of just kicking that field goal making six or seven. But then again they get to the key numbers more often because they can go for two.
But long term about 10 percent of the time in the NFL, a favorite is going to win by three points. So it looks amazing in hindsight but then when you really start crunching the numbers, you realize how likely it is. Well, again, this comes in the greater concept in my mind is literally probabilistic thinking. The event ended and we have this endpoint to look at.
Where the markets become this continuous game. And so the process with which you go through making those decisions is incredibly important. To me, it almost defies believability for me. This is skill. Mike Yeah. Or how does that work? Mike Are they? IBM, other companies are down there. DraftKings just became publicly traded a few months ago. I followed that stock closely.
These sportsbooks have been in England for 80, 90 years. All free, just acquiring users. And of course these companies already have millions of users just from being in the sports world. They just have been licking their chops for this stuff to open up. Rodrigo Can you chat a little bit about those markets that you mentioned, Vegas, the offshore sportsbook, the new U. How do they vary in Costa Rica? I have no clue. I mean, just going back to the history of the point spread again. As I mentioned, for the last 50 years, Vegas was the only legal game in the U.
And you always hear the Las Vegas, the point spread, this and that. So Las Vegas always set the number. They were the biggest and baddest sportsbook out there. That was the mecca of sports betting. The Las Vegas Hilton, which is now the Westgate, they had a huge super book.
That was kind of the other big sports book out there. You have several thousand people entering it. So the Internet has obviously made that easier for people to find out about it. And I have actually stopped playing the Super Contest a couple years ago just due to the fact it was a crap shoot as a lottery ticket.
If you could play that every single day for days a year, you might still have an edge. The TV boom happened in , really crisp money maker, I believe, that changed everything. But the squares that were rushed into the online poker room were easy pickings, and I fiddled with it a little bit for that reason.
But, yeah, there was opportunities there. My home state Virginia just legalized it. The problem is you have to be in your actual state to bet. Although I have a feeling the big boys are probably universalize their lines. You can really start being a true bookmaker and moving the lines based on the action and balancing your book with that 10 percent vig on each side.
All the local bookies would just copy and follow it. By the mid s, the offshore books basically were the leaders in the industry. Vegas was the followers. And once again the reason is because everybody is set up in Las Vegas. Maybe nobody knows what a fish is. But recreational versus professional. But it was always the wise guys were the sharp professional bettors who were respected by the sportsbooks who won long-term. So, wise guys, sharps, professional, all the same thing.
Squares, recreational, public, would be the weekend warriors, the guys who are just betting for fun that do not have an edge. Steve Nothing wrong with that. We talk about the stock market. A lot of these sports bettors are into day trading now because they have nothing else to do. Mike Sport game. I love that.
We had a brief discussion about that. I wonder if you could… I found it surprising. The whole point of that is that the externality better be that you enjoy the point of gambling, the free drinks, and you actually have to be a loser. I think that was a fascinating story. I was ready to go when I turned Being in Virginia obviously, Atlantic City was very close.
In fact, the whole reason we have legalized sports betting in other states than Nevada right now is because Atlantic City was not successful. But they did not elect to legalize sports betting. And up until when this federal law was passed banning all sports betting in other states, they still had a chance to be grandfathered in.
They declined to do it in Vegas relies so heavily on the international crowd, the Asian crowd. You go one block from Atlantic City is very dangerous. So they could never overcome that. And he lost about five appeals and finally got up to the Supreme Court. So New Jersey was ready to go within a month.
That stock is 60 to 90 cent stock and it really ran. Rodrigo I fully subscribe to the fact that the fastest bull market rally seen in history is purely due to the fact that the sports bettors have nothing else to do but to listen to Barstool Sports and bet in the moment that sports go live. You say that with tongue in cheek, though, because I think there is a little something to some of the volatility. So anybody out there who wants to track this theory, early August will be when the you-know-what hits the fan if there is any correlation.
But do you have any insights on how do they come up with the line? The game barely ends. Do you have any insights on that? I could get this AM station for some reason out of Ohio late at night and they would have the Stardust line it was called. And they would talk about the numbers they were going to set and then that would actually be the opening NFL line. This was about an hour after the games would end. And what they had back then was a lottery system. They would have a show on live, talk about the number they would set, and they would have what they called a lottery system.
And they could go up there and bet. So the Stardust basically was hanging themselves out on purpose because they wanted to have the number corrected before they opened it to the masses. And then all the other sportsbooks would copy it the next day on Monday morning.
This worked up until the early s and then by the early to mid s when I mentioned that Costa Rica took over. Two or three of them at a time. They might vary by one or so. And the key to all this guys is the limits for low. If you want to just figure out which sport you want to beat, look at the limits. I like watching it. I actually enjoy it. I realized this decades ago. So the limits are two percent of what they might be on game day because first of all they want to get the soft numbers corrected.
The closing line is the most accurate line all week. And when I used to do my research decades ago I was always like should I be using the opening line, the middle line, the closing line? But it varies all day. So run your research and whatnot you want to use the closing line. But another important factor about the closing line is called beating closing line value. This is how you can tell if you have a long term edge.
Historically our plays beat them anywhere from one to two points, which is tremendous. And that is the Holy Grail of sports betting is beating the closing line long term. Mike Love it. What are the key factors that you use or what are the key variables that you are targeting?
Steve Well, I think you guys can relate to this being systematic investors and traders. And you see it all the time. They call it going on tilt. You still have 95 percent of your money even if you have a terrible losing day. You still have 95 percent of your investment the next day. In sports, you either have percent of it or you have zero within three hours. So money management is not …. Steve The juice. We talked about that earlier and Rodrigo you said it was a big number to overcome. Theoretically if you hit Something to keep in mind with these sportsbooks and the Internet in recent years, a lot of them have what they call reduced juice where you can lay minus each side.
You only have to hit about 51 and a half percent to break even. And now you throw a little bit of an edge, and I feel like I have more than just a little bit of an edge, but you throw a little bit of an edge, you actually have an edge.
And then I had to update that a couple years later as well. Money management, and this applies to the financial markets. Number two is shopping for line values. I just said it. You have five or 10 sportsbooks, by default you will get the best line on every game. You could flip a coin and you will have a statistical edge that season betting on sports. So it amazes me my whole business side of this is based on selling information and selections to people.
Most of them have one. They might get a good line on one game. They might not on another. Rodrigo This reminds me of… you remember that Joel Greenblatt example you used to use, Mike? That little book. I will run it for you. You just give me the money. Or I could give you the signals and you can go ahead and do the trades yourself. These are the tough things. They can play really well for weeks on end and then they have a bad run and give it all back and more the week after because of the emotional side.
You saw… there was a chart yesterday on Twitter showing the amount of people 30 percent or something of TD Ameritrade investors went to cash at the worst possible time. On average… by the way, one of the reasons I release less plays than ever, when I started, I put out anything with an edge because I was playing it. Mike I want to jump on that a little bit and go a little deeper because you did talk about shopping the line for value. We have talked about selections and picks and how you could have an edge.
And finding a sharp book that gives you the real edge, and then trying to compare that information. And then we talked about money management. How much of their bankroll should they be betting? Walk me through that. Steve I keep it so simple for people. KISS, keep it simple stupid, right? And in this industry….
You got the right audience right here. I just say three percent of bankroll. And Rodrigo, the Kelly Criterion of course transfers to both sports betting. And the gamblers ran with it. But the Kelly Criterion, I think three percent of bankroll is like if you only have a 53 percent win percentage. I honestly can target 55, 50 percent, six percent long term.
I think the Kelly comes out to about seven percent. I rate my games three, four, five percent of bankroll. They get a five percent then it becomes a 20 percent play to them. So it just there again I err on the side of caution because I want everyone to live to fight another day because I know how statistical runs can go. But, yeah, I keep it simple. I say three percent of bankroll. And if a game has an edge we use it. And the way I look at it, they have a fighting chance if they follow what I tell them.
Hopefully some of them do. And the ones that do have been with me 10, 20 years. And they treat this as a form of investment. It can be bad news when you go on a cold streak but when you get hot you can compound money very fast. I was going to say earlier about someone will call me after a four and two week and then they lost. We went 67 percent, four and two. Or we go three and three, you get ruined.
So my good long-term clients have been with me for decades. They set it and forget it. They take five minutes a day. They get my updates which are sent by email. And they make the plays. Now I do put analysis with my games, as you mentioned earlier. And I like people to be able to get multi uses out of the service, so I back it up with analysis more for those who are doing their own handicapping.
And then they give them more information, they became no more accurate but they became more confident. So you give them much more information and they end up saying they would pick the same winner but they would directionally be more confident because they had this information. It is just everywhere. Steve Realistic expectations, too.
The amateur, the square, is much more sophisticated and knowledgeable and informed than ever in history. But, yeah, right now, I do think the expectations have become more reasonable which is a good thing for some of …. Everybody I speak to plays a little bit of poker, knows a little bit of the game, has improved.
Work on my low cost. You are seeing a lot less people making tactical errors in the market. But at the same time you just see it on Twitter right now. And this is the type of stuff that gets people overconfident. The volatility of the market is going up and down a half a percent a day. That overconfidence element plays across in all of these. And Mike referenced that earlier.
The odds for this are often derived from typical football games and understate the likely in the world cup group stages. Also, today Betfair has launched Tradefair. It will be interesting to see what the financial community makes of it - almost worth a separate thread. Come on… Also, the definition of investment would I think! The reason a HF manager manages a HF rather than trading his own cash is 1 to leverage his own personal alpha, right?
More than that - succesful hedge funds and investment shops in general make money through economically valuable activities like risk transference, arbitrage to maintain market efficiency, taking on liquidity problems, moving capital from where its not needed to where it is needed, etc. He might be willing to pay you to take that away from him. Also, nobody mentioned the counterparty risk you would expose yourself to. What if congress freezes offshore accounts again? Not enough upside for any fund.
To make the bet even worth anything to a fund, it would have to put up a substantial amount of money obviously. Even if there were two, the chances of the arbitrage opportunity involving those two websites is slim to none. The house has slighly higher odds than the other person.
The financial markets are not a zero sum game unlike what some teach. Companies are creating value by combining resources, buying, selling, etc. I get the copyright. Binary betting. Why don't Hedge Funds diversify into sports betting, poker, black jack? CFA General. Cuban remains well respected in the business world and the sports world. The Dallas Mavericks team owner and star of the hit show Shark Tank would be the clear choice for launching a sports betting hedge fund.
Unfortunately, the NBA had other ideas. Cuban contended that sharp sports bettors are successful due to the fact that they have much more information about the teams involved. Think about how much or little you know about the companies represented in your k or other mutual funds. I bet that you are far more familiar with your favorite NFL team. Cuban understood this fact, and he knew that the potential return on sports betting is massive. Although Cuban himself was forced to miss out, the idea was implemented within 5 years of introducing the notion.
Through economic turndown and political turmoil, sports will always thrive. Why do sports always succeed in the face of global pandemics or large scale financial disaster? Because we demand it, and the money at the top of each league wields enough power to ensure the dollars continue pouring in.
Much of the country followed. This mass closing included bars, restaurants, and theaters. However, by July, NBA players were back in action. That status translates to the NFL sports betting market as well. The NFL was forced to cancel their preseason, but the league is scheduled to start in less than two weeks. The most blatant display of the power of professional sports is the following point. Texas Governor Greg Abbot, the same man that has hamstrung small business by shuttering thousands of small local bars throughout the state, has given Jerry Jones and the Dallas Cowboys the green light to have fans in attendance when play begins.
The fact that sports exist in the face of a global pandemic shows what an excellent investment it can be. Yet, there are plenty of games to bet on. The show must go on. Hedge funds are, by their nature, incredibly volatile. After all, the investors that shop hedge funds are looking for massive returns on their money. That potential for huge gains comes with substantial risks. These risks are not altogether vanquished by choosing a sports betting hedge fund.
In years like , the hedge funds that focus on volatility should be theoretically shredding when it comes to profits. Yet many have been enduring catastrophic failures. In fact, sports betting hedge funds should be able to generate significant gains without market leverage. This largely eliminates the great downsides associated with other alternative assets. That is contingent on the responsible management of the funds available. Centaur Galileo provides a cautionary tale for both investors and possible clients.
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