Posts Tagged ‘gambling’

Are You an Investor, or an Investing Addict

May 13th, 2013
Flickr Creative Commons

Flickr Creative Commons

If you notice some of the terminology of investing, you’ll see a connection.

Bet. Hedge. Loss. Long-shot. Odds. Risk.

All of these terms are interchangeable with gambling parlance. There’s a connection between the two — and while most investors will tell you that they aren’t gamblers, the words they use give them away. If there is a connection between gambling and investing, it follows that investing can have some addictive features, just like gambling does. Gamblers, after all, can go to Gambler’s Anonymous. Should there be an Investor’s Anonymous?

Investors may want to look at signs of addiction in their own trading behavior. Gamblers who become addicted to game of chance rarely are in it for the money, they are in it for the emotional jolt they get from betting. The rush.  If they win, that money goes into more bets and, usually, bets with much higher risks. Then, the crash.

All investors feel that same sense of exhilaration when a stock they bought starts to soar, or when a stock they shorted starts to drop. But, what do you do after the excitement. Can you take money off of the table? Can you wait until the market settles?

You may also want to look at how your emotions have fluctuated through the years. Do the “good times” of your life also correspond with bull markets — and the bad times of your life seem to be bear markets?

Asking these questions aren’t easy — and it’s hard for addicts to self-assess — but becoming more aware of whether we’re investing for fun or profit, or whether we’re just addicted to the rush of winning and losing, is important.

You may also find that you’re not addicted. But, this can still help you see how emotions can change your outlook on the market and directly influence how you invest — sometimes for good, but mostly for bad.


Automated Trading, Business Strategy, Investing, Money , ,

Trading and Poker

February 15th, 2011

Recently I discovered Texas Hold’em Poker on Facebook. I never really enjoyed playing poker very much, but to my surprise it is pretty interesting. Why? Because the more I play poker the more I realize how it is like trading.

Image courtesy Joe King

As I play, I immediately relate many things I have read about trading to what is happening in the game. It seems that many the information in books about trading is totally applicable to poker.

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Automated Trading, Great Books, Internet, Investing, Money, Success , , , , , , , , , , , , , ,

Trade Everything: How Technology is Opening New Markets

April 28th, 2010

The types of derivatives and exotic derivatives that are traded are pretty amazing. You can take positions on everything from interest rates to weather, from pig futures to soybeans.

You haven’t seen anything yet. The number of items that can be traded is increasing, another sign of advancing technology and the the continual search for new wealth building opportunities.The types of assets you can trade is also becoming more varied.

Just take a look at Intrade.

Intrade is a prediction market that’s drawing a lot of interest. The prediction market allows people to trade typical commodities, like gold, oil, and currencies. Political outcomes, like the 2008 Presidential elections, are among the most popular trades on Intrade.

But, there are markets for a wide and weird range of other assets and scenarios.

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Accelerating Technology, Internet, Investing, Money, Online Investing AI , , , , ,

You Can’t Win for Losing: Why Money Management Matters

January 19th, 2010
Picture courtesy banspy @ Flickr

Picture courtesy banspy @ Flickr

Trading and gambling have been metaphorically tied together forever.

Traders talk about making a bet. They say they hit the jackpot, or they left their money on the table.

Trading and gambling, after all, do share commonalities–risk, returns, a certain element of randomness, and position sizing–to name a few.

But the comparisons, or lessons, don’t stop there.

According to a new study from Cornell University, investors and traders can all learn from a slightly contrarian gambling strategy. The study makes the case that online poker players who win more hands, end up losing more money.

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Accelerating Technology, Automated Trading, Business Strategy, Dreams Come True, Internet, Investing, Money, Online Investing AI, Success, US Economy , , , , , , ,

What We Can Learn From Gambler’s $127 Million Losing Streak

December 9th, 2009


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 , , , , , , , ,

Six Tips To Diminish Risk And Boost Returns

June 25th, 2009
Flickr picture--Roadside Pictures

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 , , , , , , ,