Money Management – Expectations

By William Foote - Covers Experts

In the past few weeks, we have put out two articles on the importance of proper money management. The discussion points revolved around proper bet size and maintaining of discipline. Today we want to broach the topic of expectations. In the past we have written extensively on this subject. However, our emphasis was on winning percentages. We explored the myths of 70% and 80% winning claims by unscrupulous Sports Services. We also taught the value and profit potential of winning 55% to 60% over an extended period of time.

While we are going to be discussing expectations today, it is a different genre of expectation that we want to explore. Superior Sports is a firm believer in the concept of sports betting as an investment vehicle. Quite simply, no other outlook will allow you to succeed at it. If you are looking to get rich quick, then betting on sports is not for you. If you are looking for harmless entertainment and do not mind blowing a few dollars, then this article is not for you. If you are serious about making money year in and year out, then listen carefully.

To demonstrate our point more effectively, we will be sharing a discussion we had the other day with one of our clients. This is not to belittle him, but used more as an example. We come across these types of folks almost weekly and they are a product of misconstrued expectations.

Anyhow, the conversation goes something like this. He called and said, “I have not really made as much money as I had wanted to so far.” As we normally do in instances such as these, we sat back for a moment, scratched our head and then asked some questions.

The first thing we asked was how much he has made. To which he replied, “In the six months I have been with you, I have only made $2000.” Our next question was how much his beginning bankroll was? To which he replied, “I started with $2000.” Then we asked what other type of investments he owns. To which he replied, “most of my money is split up between a money market account and a certificate of deposit account.” The last question we asked was how much he was earning on those accounts? To which he replied, “well, the money market earns 3% and the CD earns 6%”.

Is anyone following this? This gentleman was disappointed that he only earned 100% on his money in six months by betting on sports. This same gentleman was thoroughly satisfied with the average 4.5% return he was receiving from his investment accounts. To put this into context, for every $2000 he has invested at the bank, he will be returning $90 per year, yet he is unsatisfied with the $2000 he earned in six months wagering on sports. What is wrong with this picture?

While most of you that invest are hopefully earning more than 4.5% per year, you would have to be doing extraordinarily well to have earned 100% in the last six months. If you have earned that, please call us. You are more than welcome to manage some of our money!!!

This misinformed gentleman now has a $4000 bankroll to play with. If we earn him another 100% in six months then he will be at $8000. That is a 400% return in a year. Hypothetically at the end of the second year, he would be at a $32,000 bankroll.

It becomes very clear that gambling on sports is an extremely profitable investment vehicle. In very simplistic terms, this form of investment can be achieved by anyone that has access to 55% or better picks. So we will ask once again, why do 95% of sports gamblers lose money and why do those that make money feel unsatisfied with the return? It is lack of discipline, lack of a good plan, and warped expectations.

Did you know that 70% of the folks who visit Las Vegas are up money at some point during their stay? Did you know 90% of folks that visit Las Vegas go home losers? Poor money management and an unrealistic expectation is the culprit. Gamblers visiting Las Vegas expect to make 10 times the amount they started with. Trying to fulfill this expectation they undoubtedly make unwise betting decisions and end up losing. This same phenomenon happens day in and day out with sports bettors. If you are patient and stick to a plan, betting on sports will make you an unbelievable amount of money. If you are looking to get rich quick, you are better off trying the lottery.

Editor's Note: I wrote this article several years ago, so some of the interest rate and stock market analogies are outdated. However, the thesis remains unchanged. - William D. Foote