|Pretty solid article comparing sports betting and stock trading.
Posted: 7/26/2010 9:47:37 PM
Vs Stock Trading
By Bettingresource.com for bettingresource articles
Before we compare sports betting and
stock trading, lets learn the difference between the traditional
gambler and the non traditional gambler (investor.) Be it sports
betting, stock market, playing poker or any sort of gambling, the
traditional gambler will be a long term loser because they gamble
without edge and proper money management. These traditional
bettors are usually degenerates, problem gamblers or "action
junkies." A non traditional gambler (an investor) on the other hand
is someone who only gambles (invests) with an edge and proper money
management for long term success.
Sports betting attracts many traditional gamblers because of its
simple nature and as a result traditional gamblers (long term
losers) out number investors (long term winners.) Stock market on
the other hand rarely attracts any traditional gamblers because of
its complex structure and as a result investors out number
traditional gamblers. We know that investors are long term
winners relative to traditional gamblers who are losers. And that is
exactly why many consider sports betting as gambling (high risk
investment) and stock trading as investing (low risk gamble).
But if you look at sports betting and stock trading in terms of
investors perspective only, sports betting is a much safer
play because it is easy to manage, cheaper in the vig (commission) and much cheaper in
the bankroll. Both are a form of gambling and the kicker with both is same--in order to be
successful you need to be skillful, especially with money
management AND finding the edge.
Sports betting is much easier to manage because most of the
variables and information are publicly available and all you have to
do is analyze everything to find the edge. Stock market on the other
hand is more complex--monitoring the performance of companies is much harder
than monitoring sports teams. There are too many unknown variables
in the stock market that could affect the performance of your
stocks. Often, these variables are not available to the public
immediately and because of this it is really difficult to gain an
edge unless you are an insider in the company or stock market.
Insider trading is illegal but it is much more common than match
fixing in sports betting.
When it comes to bankroll, sports betting wins hands down.
Assuming you have the edge in sports betting and stock market, you
are more likely to get much better return on your investment in
sports betting than stock market. As mentioned before, professional
sports investors do not bet any more than 2 to 3% of their bankroll
in any bets. If you make all your bets at -110 (1.91) odds are fixed
amount, you just need to hit 53% or better of your bets to make
profit. At bettingresource we play -110 odds only when we play point
spreads or totals--in most other occasions we play +ev bets with
higher odds and this allows us to make profit even when we hit less
than 50%. By betting 2 to 3% of the bankroll, a sports investor with
a $10,000 bankroll can make bets in the volume of hundreds of
thousands throughout the year. At bettingresource, we make 1000 to
1250 bets each year with our weekly picks and the ROI in these bets
are about 10%--that is a $20,000 to $30,000 net profit for a $10,000
investor after a year. In order to make similar profit in the stock
market, one would need over $100,000 bankroll. In addition to
the big capital required, your investment is also exposed to
devastating loses overnight in case of recession or stock market
crash. Sports betting is the only investment that will not be
affected during tough economic times.
Finally, fees involved in stock trading are hard to overcome
unless your capital is very large. There are also many levels of
fees. You may here that the fee is only X amount per trade but this
means 2X the fees because you have to execute the trade twice for
each stock (once when you buy and once when you sell!) There
is also the bid and ask fee. Bid price is the price announced by the
buyer at which s/he is willing to purchase a stock. Ask price is the
price announced by the seller at which s/he is willing to sell a
stock. Bid and ask prices are never the same. In fact, the price
announced by the seller (the ask price) is always higher than the
bid price. As a result you are required to pay the ask price in case
you have decided to purchase a stock and pay a higher price. On the
other hand, if you decide to sell a stock you will have to receive
the bid price, which is of a lower amount than the ask price. The
difference between ask and bid prices is referred to as the spread.
The spread goes to the pockets of the broker or specialist who was
responsible for the stock transaction for the paying of other fees.
There also numerous other account administration fees and
commissions that you may encounter. For example, take a look at the
fee schedule at
TD Ameritrade. When it comes to sports betting you don't have to
worry about any of these fees because good reputable sportsbooks
don't charge any transaction fees on deposits and withdrawals (they
will even pay all the fedex delivery cost of your cheque!) The only
commission that you pay for sportsbook is vig.
+EV handicappers like bettingresource minimize or completely avoid
vig by making valube bets. If you
play only at good reputable books, the vig is really low and they are
Therefore, contrary to the popular belief, sports
betting is a much safer play than stock market if you approach it
with an investors perspective. However, sports investing and stock
investing are viewed differently by government regulators.
Governments around the globe encourage stock wagering, a nice
respectable occupation in the eyes of most. Sports bettors, on the
other hand, are shunned. They do not wear suits and ties. And in
many cases, sports investors do not enjoy the support of the general
public or the government regulatory bodies. Why? Taxes! We could
write a whole new article on this topic but for now let us just
state the fact that it is much easier for the government to milk
taxes from stock investors than sports investors.