The Online Investing AI Blog

lrargerich@Flcikr

Terrance Watanabe had it all.

He owned THE most successful import-export business in America. He had the big house and the nice cars.

He sold his business in 2000 for an enormous sum of money–experts expect it was in the hundreds of millions–and possibly the billions of–dollars.

Bucking the common stereotype of the rich CEO, Terrance never became a snob. He started a philanthropy and was known as a big tipper.

Yep. Terrance had it all. Including a huge gambling problem. The Wall Street Journal reports he lost nearly $127 million in a now legendary alcohol-fueled gambling binge. Before we get all high and mighty judging Terrance’s idiocy, we should take a step back and wonder what lessons we can learn from Terrance’s fall.

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Investing, Money, Online Investing AI, Success casino, debt, emotions, gambling, Money, odds, problem, trading, Wall Street Journal

Yesterday I read a book that I can recommend because it was both interesting and informative. Calculated Bets: Computers, Gambling, and Mathematical Modeling to Win is the story of a college professor who decided to use his intelligence and education to make money betting on, of all sports, Jai Alai. In case you don’t know what Jai Alai is, it’s a sport that is very popular in Florida and part of the title sequence of Miami Vice. Those guys have a big hook on their hand and catch and throw a ball.

The interesting thing about the book is that the author’s goal is quite similar to what many people do when they trade stocks (or other assets): They make educated bets and try to find a system that consistently makes money.

How is betting on Jai Alai similar to trading stocks?

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Automated Trading, Great Books, Investing, Success Automated Trading, calculated bets, casino, computers, edge, gambler, Investing, trading

Flickr picture--Roadside Pictures

Money isn’t the root of all evil; risk is.

Risk is an attempt to scientifically categorize the simple truth that, since a better analogy escapes me, shit happens.

Risk makes fortunes and destroys fortunes. It’s ruined banks and created them. Risk has sent traders to the mansion… and the poor house.

But, just as it never says in the Bible that money is the root of all evil, but the lack of money is the root of all evil, so my pithy phrase that risk is the root of all evil isn’t quite on target.

It’s the lack of understanding of risk that is the root of all evil for investors and traders.

So, how can you make friends with risk? Here are six tips to help you make risk your friend:

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Automated Trading, Business Strategy, Investing, Online Investing AI casino, gambling, investments, risk, risk averse, trader, trading, trading accounts