I love Vegas. It’s your one-stop shop for unbridled, unadulterated fun. Blackjack and poker aren’t really my bag. I like sports betting, and roulette ever since the Girlfriend got me into it. Sports betting combined .. of my favorite activities: watching sports, sitting in comfy chairs, watching sports games other than the one game I really care about, free drinks, and the adrenaline rush that only a meaningless $10 bet can bring over the course of two hours!
And like table games it’s really easy to lose your money. I win maybe one of every three bets, and when I do win I cover the spread by an average margin of about 1/2pt. “How is this possible?” I constantly ask myself as I throw my hard earned money away. Vegas bookies must be the nerdy math whizzes from high school that found their niche after earning PhDs from MIT and Berkeley. <–Ironic statement coming from an engineer, I know.
Now here’s some food for thought:
Why is it that Wall Street estimates are consistently a source of anguish, anxiety and excitement? It’s because it’s virtually impossible for these guys to be right. If I have to estimate the net revenue of retail sales from Wal-Mart for the upcoming quarter, the numbers I’m playing with are in the billions. So how could I possibly
guess estimate correctly!? Unsuprisingly, estimates are invariably incorrect, but that’s not the stress-inducing, volumes-of-shares-traded-increasing fun part. The “fun” part is seeing how much these “experts” missed by (which is seemingly often a wide margin), and in which direction. This speculation fuels the market movement for the week or two leading up to the company’s announcement.
But Vegas oddsmakers rarely get it right on the first try either, they move the line depending on how the expert fans end up betting. The Street’s estimate makers don’t have this luxury; their estimates are supposed to be based on a million and one economic factors that are supposedly quantifiable and calculable. But wouldn’t it be interesting (and cataclysmic) if the estimates changed as investors bet for/against a given company in the days leading up to its quarterly earnings reports? Man, that would be entertaining….