Sports Betting Portfolio Management by Matt
Elliott
The subject of financial investment is such a wide and varied
area. We all know (or should know), that investing surplus funds is
a sound idea; nothing new there. If you make the decision to invest,
what investment options do you have?
1. Property - unit, house, holiday house, commercial property, a
managed property investment fund etc.
2. Shares - stock options, different stock investment sectors such
as small capitalization mining companies, international or local
share funds etc.
3. Fixed Interest - bonds, convertible notes, fixed deposits etc
The above are your major investments categories in which you may be
looking to invest.
These are the 'traditional' type of investments however there are
other investment areas which are just as, or more profitable than
your main 'stable' of investment options. These alternative
investment options include tree crops, vintage cars, wines, art,
other collectables and also sports betting and horse racing!
As the majority of people do not understand the betting industry,
they generally scoff at the idea of sports/horse race betting as a
legitimate investment option. That is because they have only been
exposed to one side of the business, the entertainment side. Of
course gambling is generally painted in an ordinary light in the
media where it is linked to family break downs and suicides. The
perception among those who haven't been enlightened is that if you
bet often, you must have a gambling problem!
"If the truth be known many who play the stock market are the
biggest gamblers around."
They are never labeled gamblers, nor do they believe that they are
gambling because their gambling vehicle is not horses but shares in
companies. They like to think of their random and uneducated
decisions as being an 'investment' rather than a bet. In this light,
it is OK to lose money because 'it is an investment'. Many are
simply betting on the price of a share just the same as an
uneducated sports bettor who makes a decision on the likely outcome
of a game.
The purpose of this article is to show that gambling can be a
serious and profitable business as well as a fun pastime. I decided
to write this article after speaking with a good mate of mine who
happens to be financial advisor to 'high net worth' clients. You may
be surprised and interested to note that he sees sports betting as
playing a very important role in his investment portfolio. He knows
very little about sports but he sees it as a very serious business
and he follows our selections 'to the letter'. (Not that he would
tell his clients that he invests in sport as I am sure they just
wouldn't 'get it'.)
The similarities between the more 'traditional' type investments and
gambling are many. We are all playing the same game, which is to . .
.
beat the market and optimize our total wealth.
Financial markets such as the stock market are generally efficient
and represent the general view of the aggregate of those that invest
into the market. Investing in any financial market (including the
sports betting market) raises financial questions involving decision
making under uncertainty. Many of those that play such markets
simply do not understand just what they are up against.
People go to financial advisors for advice on how to best invest
their money. They are thought to be the experts. They have been to
University and have completed courses through the Australian
Securities Institute to become an advisor. It is the same with other
specialized services, such as doctors and solicitors. People recognize
the specialized knowledge that these guys have and understand the
value of paying such experts for their opinions.
I believe the reason to why more aren't successful in gambling is
that the majority of punters have no idea what they are up against.
They believe that they can beat the game with no specific specialized
knowledge. There is a price you have to pay to gain the knowledge
and experience required to become successful.
This is very similar for both traditional investment advisors and
also in the gambling field. Some advisors are better than others, as
are some investments and some investment funds are better than
others. Some investment funds make excellent returns for their
clients however, on the other hand, the majority can't even beat the
average based on the returns of the 'All Ords' index!
I can see myself starting to get off track here.
Professional gambling is not for everyone, however I truly believe
that it is within reach of everyone. Now there are two ways in which
you can make a living out of gambling.
1. You can spend years studying mathematics and learn the ins and
the outs of your chosen betting field to hopefully build the skills
necessary to make consistent profits
2. You can pay those that have trodden the path above for their specialized
knowledge and skill and then focus your attention on becoming an
astute gambling portfolio manager.
Both methods will provide very similar betting results. Gambling is
like any other profession. You simply cannot become successful
without truly applying yourself and spending the time (and the
money), to learn and become proficient. (Contrary to what most
'retail' punters would suggest). It is no different to a financial
advisor who studies commerce at university and then completes a
Diploma of Financial Markets at the Securities Institute. They have
paid the necessary price (both in time and money), to obtain the
required information to pursue a career in their chosen field of
endeavour.
The thing with sports/horse racing is that punters expect wealth and
success to come to them while they are doing nothing to improve
their skills. I believe this is largely due to the fact that they do
not understand what they are up against and how tough it is for your
average casual punter these days to turn a profit.
Anyway, back to the purpose of this article. It is well and truly
possible for anyone to become a successful and highly profitable
gambler.
As we saw above, there are two choices that you could make. One
requires years of study to develop the required specialized
knowledge to allow you to become successful; the second option can
be thought of as being the easier path.
Just as you may well pay a financial advisor for their advice, you
have the option to pay an expert in gambling for their betting
advice. Doing so will leave you as purely a manager of your
investments.
If you have ever been to a financial advisor, you will realize that
they love their pie charts and love to talk about diversification
and asset allocation. They split your total investment wealth up
into different areas with the aim of reducing risk.
Well consider doing something similar with gambling. There are a
number of excellent sports/racing services which show high returns
and have been showing high returns for a good period. You may like
to build a portfolio of gambling investment options based around the
good services. How you allocate your resources for the different
services you may use is up to you. For example your gambling
portfolio may comprise of two horse racing approaches, two tennis
approaches, one AFL, one NRL and one Super12's for example.
After sourcing your betting information from a service, you have the
task of managing your portfolio to maximize the rate of growth of
your bank and to minimize your risk. For those that take the time to
look at the possibilities of sports betting investment, you can
understand why it makes a lot of sense from an investment angle. You
invest your money for a whole year in say the stock market hoping
for a standard 10% return. You can make that on every single dollar
that you outlay in some sports!
Investing in a conservative manner can easily see you double your
original investment capital within one year. Returns unheard of in
other 'traditional' methods of investment and yet contrary to what
most believe it is unbelievably safe if you find a reliable source
to purchase your advice from.
In sports betting you can use mathematics to calculate very
accurately worst case scenarios and no, that is not generally a
total loss of starting capital. We have a simulation program
available on the website which you can access from the following
link Punting Ace Simulation Program which will give you an excellent
idea of what you can expect to achieve based on certain criteria.
We also have programs which will simulate your projected performance
based on certain bankroll settings. To simulate a year of our tennis
package, select the following link Punting Ace Tennis Simulation or
to simulate a year of our AFL betting package, select the following
link Punting Ace AFL Simulation.
Summary
If you are not happy "putting all your eggs in one
basket", why not consider sports betting as an
"alternative investment" similar to tree crop investments
or hedge funds. Any prudent financial planner will explain to you
the benefits of diversifying across a number of different markets
and investment products. Indeed, investment products such as options
and instalment warrants (and to some extent margin lending), are
designed to "enhance" your overall portfolio returns and
as such, traditional investment advisers may allocate a
"percentage" of your overall portfolio to these products.
With risk adjusted returns far in excess of "main stream"
investment products, why wouldn't you apply a percentage of your
portfolio to sports betting? As your financial adviser will agree,
sports betting is not correlated with any main stream investment
markets, and indeed given the disappointing recent performance of
the stock market (with the exception of last years return of approx
25%) the current investment markets are awash with products that are
non-correlated to the stockmarket. For example, hedge funds, tree
investments, caravan park property trusts and chicken farms (yes
that last one is actually true). Therefore sports betting should at
least be considered as part of a prudent "diversified"
investment portfolio.
Sport Betting Investment Steps
1. Decide from day one that you have the discipline to follow your
plan through and that you will operate in a business like fashion
and will keep records and the like.
2. Find a reputable information provider for your selections.
Remember the goal is for you to be only the portfolio manager. You
don't want to have to come up with the selections; leave that to
those that have proven track records and are experts in their
fields.
3. Decide on how you will divide up your total starting capital over
the information provider(s)/sport(s) which you have gathered.
4. Now follow through with your plan setting aside time for constant
reflection and self evaluation in an attempt to maximize your
returns whilst minimizing your risk.
Disclaimer - this article is not meant to be taken as offering
financial advice. The author is not a qualified financial advisor
and as such, cannot give such advice. We advise you to seek
independent advice from a qualified advisor before committing any
funds.
This article is protected by international Copyright Elk
Publications Pty Ltd February 2005 Please contact jesskirley@puntingace.com
if you wish to reproduce this article elsewhere.
www.puntingace.com
About the Author
Australians Matt Elliott and Jess Kirley of www.puntingace.com,
have been investing together professionally on sports for over 3
years now. They take a very mathematical approach to their betting,
and liken it more trading a commodity like stocks than actual
gambling. They continue to lead the industry with innovative
approaches to sports betting and their reputation among their peers
is a testimony to that.
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