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Speaker 1: Good afternoon. You're listening to Gambling with an Edge.

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Speaker 2: Now Here are your hosts, Bob Dancer and Richard Munchkin.

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Speaker 3: Good afternoon, Welcome to Gambling with an Edge on Bob

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Dancer and I'm Richard Munchkin.

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Speaker 2: Our guest today is poker player and sports better Dan Abrams,

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who has written a new book entitled Sharp Money. Dan Abrams,

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Welcome to Gambling with an Edge.

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Speaker 1: Thank you, thanks for having me by training.

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Speaker 2: You're an engineer. How did you get started playing poker?

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Speaker 1: Well, like a lot of people in America, when the

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World Series of Poker started being broadcast on ESPN in

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two thousand and three. That was the year that Chris

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Moneymaker won the main event, and it became a very

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very big deal because he won an online satellite to

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even get into the main event, and then he wound

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up winning and it became really riveting television, and they

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would put it on after you know, Sunday night baseball

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or whatever games they had going. So I really kind

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of got interested that way. I had played poker just

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for fun with my friends even as young as elementary school,

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but never really played it for money before. And then

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you know, when when some guy wins two and a

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half million dollars playing poker. It piques a lot of

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people's interest.

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Speaker 3: So you're really known for RAZ, and you did a

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lot of teaching of RAZ, and so can you explain

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sort of how that evolution happened.

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Speaker 1: Yeah, So the most popular game obviously was no Limit

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Hold Them, but most of the online sites would spread

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other types of games, including seven Card Stud, which I

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was familiar with from playing as a kid and as

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a teenager. So I started playing that for a while

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and I got pretty good at that, and I had

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seen RAS covered on TV and I understood a little

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bit about it, but I was primarily concentrating on STUD.

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And then I went through a period of several days

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where I couldn't even get a decent starting hand, and

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if I did, you know, if I got something like

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split jacks, somebody with a king would raise and then

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an ace would re raise him and I'd have to fold.

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And I thought, well, let me give this RAZ game

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a try, because the starting hands I tend to get

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seemed to be much better for RAS than they are

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for STUD. And I just started at the lowest possible stakes,

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really to get my feet wet, and I found out

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that there weren't a whole lot of good players at

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those stakes on like No Limit Hold Them, where you

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could multi table so easily, that the good players would

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play at the low stakes, but they would play like

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twelve or sixteen tables at a time, and that's how

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they would win money.

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Speaker 3: And what was it about REZ that drew you to

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it other than the fact that usually it's not where

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all the sharpest people are when you know, kind of

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go away from the mainstream.

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Speaker 1: Yeah, exactly. And what you could do on the online

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sites is you could keep track of players that you

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had played before. You could take notes on them or

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assign like a color code to them. And I found

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that a lot of the players that I was going

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up against in RAZ that were really bad at it,

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I had notes on them as being very good No

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Limit Hold Them players, And I began to realize that

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it's really very much the opposite of No Limit Hold

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Them in so many ways that the people who were

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trying it and trying to play the same way they

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played in the Limit Hold Them were really really bad.

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So I really got interested that way and started to

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do a little bit of studying of the game, and

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there really wasn't much. There was not There was only

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really one book that had was completely about Raz and

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that was Sklansky on Poker by David Splansky. So I

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got that and I read it and I was making

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all sorts of notes, trying to study it like a textbook,

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and he does like example hands at the end of

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the book, and for one of them, he said, in

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this situation, you should fold unless there's a lot of

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money in the pot. And I thought, oh, geez, well,

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I don't know how much a lot of money is

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to him, right, So I tried to figure it out

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on my own to see it kind of solve it backwards,

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to see how much money there would need to be

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in the pot to make it worth calling in that

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situation rather than fold. And what I came up with

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was that it was really a very small amount of

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money to be in the pot at that point in

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the hand. And so I was like, huh, maybe there's

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there's room to investigate Raz here that' Sklansky hadn't really covered.

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And that's what really got me rolling.

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Speaker 2: You said you switched games because you were card dead,

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which is a type of betting a trend, reasoning that

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you're now strongly opposed to as an investor. Now you're

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very much an expert investor now, but when you but

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using that reasoning for starting RAS seem like a very

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ploppy move.

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Speaker 1: Is that fair? Oh yeah, it's very fair. I mean

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I've made all sorts of mistakes in when I started investing,

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when I started playing poker. You know, the same type

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of thoughts that most people are thinking when they do that.

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I just managed to analyze them a little bit and

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overcome those mistakes.

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Speaker 3: So how did the You obviously went from begin a

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RES player to one of the top RES players out

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there and became kind of a teacher at a site

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that people tended to really flock to to learn more

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about RES. How did that come about?

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Speaker 1: Well, it's kind of a roundabout story, which I tell

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in the book, is that I was looking to do

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some one on one poker coaching for RAZ, specifically because

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I noticed that at stakes above the level that I

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was bankrolled to play, there would be a lot of

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players who really didn't know what they were doing at

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RAZ at all. They were just hunting away money. And

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I thought, well, if I can get a few of

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these guys to be interested in one on one coaching

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to make a little money on the side doing that,

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So I was looking for perspective students, and I had

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had the occasion to be looking at the forums on

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two plus two if you If you recall, two plus

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two Publishing has a huge set of forums that were

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very very popular back in the day, and they had

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a couple of hands that were played by one of

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the top no limit hold'em tournament players and they they

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had they could show the hand history, and they were

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they were really played badly. So I looked up the

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guy's profile and he had his email address in the profile.

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So I sent him an email and I said, hey, look,

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I'm a RAZ specialist. I play the game almost exclusively.

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I've done all this research and if you would be interested,

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I would like to coach you. And I basically gave him,

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like some some free example hands to take a look

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at to see what he thought. It ended up he

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didn't and he didn't wind up taking me on as

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a coach, But later on he apparently talked to some

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of his friends about it, and they were starting up

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a poker training site, so they reached out to me

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and said, would you be interested in making videos on RAZ?

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And so that's how I got that gig.

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Speaker 3: Are those videos still out there?

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Speaker 1: No, actually they're not. They had a that site ended

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up being bought by card Runners, which was a much

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bigger site, and I eventually made some videos for card Runners.

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So actually, if you look on YouTube, you can see

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some of the snippets that card Runners would put out

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as like, you know, five minute trailer of my videos.

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There's still a few of those on YouTube if you

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look them up.

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Speaker 3: Can can you still find RAS games? Are there? I

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assume there's a RAS tournament in the World Series.

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Speaker 1: Yeah. The World Series now has two RAZ tournaments every year,

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and of course they have mixed game tournaments. It's probably

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about seven or eight of them each year that include RAZ.

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It's part of like a horse game or an eight

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game mix and that sort of thing. And they have

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there's some sites online sites that will feature RAZ still,

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but mostly in the US. You can only play in

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certain states unless you use crypto sites. So the crypto

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site called Fena that still has RAS and they get

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RAZ games going occasionally.

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Speaker 3: Are you still actively playing or no?

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Speaker 1: Yeah? At this point, you know, just every once in

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a while. I think the games are so sporadic but

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I will play when they're available.

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Speaker 2: Now it's it's well known that a number of very

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successful poker players have lost a ton of money betting sports. Yeah,

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didn't that give you pause before you went that route?

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And how did you assume your journey would be different

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than theirs?

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Speaker 1: It gave me a lot of pause, you know. I

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started playing poker probably the end of two thousand and three,

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and and I didn't start betting sports until twenty twenty.

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And I really never intended to bet sports at all,

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because I'd heard from several people that that's the best

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way for a poker player, a good poker player to

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lose money, to start betting sports. But they had a

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site in Pennsylvania where I lived at the time, which

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was Poker Stars for Poker, But then they also had

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a section for sports betting through Fox Bet, and so

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they would send promotions to me all the time, saying,

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you know, here's an odds boost or a free bet

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or whatever to try to get me interested in sports betting.

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So I reached out to my friend Eric, who I

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had played poker with for years, and he had started

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sports betting, and I sought out his advice and started playing.

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Speaker 3: Through that, and are you still doing that?

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Speaker 1: Yes, I mean Fox bet is no more they shut down,

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but I'm still actively sports betting and you still doing

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well with that.

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Speaker 3: So one of the things that really caught my eye

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in the book was your discussion about why it may

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be a good thing to over bet your bankroll when

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you're starting out and have a small bankroll. So you

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can we talk about that.

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Speaker 1: Yeah, sure, that's the sort of thing that is actually

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being talked about in financial circles by a lot of

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academics because, you know, they want to guide people in

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how to construct the portfolio, and you know, you want

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to have a certain amount of risk associated with your portfolio,

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but not too much risk because you know you want

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to protect it. Same thing with your bankroll. But they

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realize that the amount of money you have in your

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portfolio now doesn't represent the whole story. You have to

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take into account how much future earnings you're going to have.

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So somebody close to retirement should be a lot more

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conservative with their bankroll or their portfolio then somebody in

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their twenties or thirties should be. And they actually did

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a lot of very complicated academic research to prove this

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point and so I said, well, the same thing can

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apply equally well to sports betting. I mean, when you

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have when you're at a professional level and you have

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a bankroll, say in the millions, are close to it,

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that's very hard to replace. But if you're doing it

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on the side where you're earning an income from a

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job and you're using a certain amount set size as

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your bankroll, if you have to, if you go bust

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on that bankroll and you have to replenish it, and

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say you take three or four months to replenish it,

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that's not a disaster. You take a break, but you're

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not out of the game. And the whole idea of

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protecting your bank roll is if you lose your whole bankroll,

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you're out of the game. You can't bet anymore, and

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you can't take advantage of your edge anymore at that point.

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So it's really and it was the sort of thing

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in poker that was very, very common and probably still

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is for the younger players where they would take shots

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at higher levels and I did as well, you know

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when I was starting out. You know, they'll they'll take

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set aside, maybe twenty percent of their bank roll and say, okay,

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I'm going to go up a couple of levels and

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see if I can beat them. And if they can,

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they stay at those levels and can earn a lot

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more per hour. They don't, you know, they lose twenty

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percent of their bank roll. They step back down and

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they start grinding it back up, but they're at the

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regular stakes.

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Speaker 2: Yeah.

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Speaker 3: I remember when I was starting out, I knew one

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blackjack player in particular who had a ten thousand dollars

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bank roll and he was out betting two hands of

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five hundred and I thought he was absolutely insane. But

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you know, he happened to run well, and he ran

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it up to one hundred K. And and I don't know,

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00:14:08,639 --> 00:14:10,559
I mean, he didn't have a job at the time.

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You know, that was what he was planning to do.

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But you know, I guess in retrospect, well, yeah, if

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he lost it, well he could go back and get

247
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a job and build up a bankroll and start over.

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But it was certainly more risk than I was willing

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to take.

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00:14:28,600 --> 00:14:31,480
Speaker 2: Yeah, I when I talked a similar point in my

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video poker classes, I would make the point that when

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you're twenty five and you'd go broke, it's not a

253
00:14:38,759 --> 00:14:41,679
good thing. But when you're seventy and go broke as

254
00:14:41,720 --> 00:14:46,039
a disaster, And so when you're starting out you have

255
00:14:46,240 --> 00:14:50,200
so many more options of ways to get the money back,

256
00:14:50,879 --> 00:14:55,120
and when you're seventy, your best money making options are over.

257
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So I did it in terms of age rather than wealth,

258
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But it's a simil principle, I think.

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Speaker 3: Well, I think also about when you're twenty five, or

260
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when I was twenty five, my lifestyle was pretty spartan.

261
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I would never stay in a motel better than Motel

262
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six or whatever was the cheapest possible thing I could find.

263
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Speaker 2: But you know, you reach.

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Speaker 3: A certain point in your life where I'm not going

265
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to stay in Motel six anymore, you know what I mean,

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Like you're used to more comforts as you get older

267
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and your bankroll grows, and so yeah, I totally agree

268
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with you that there's a big difference going growth later.

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Speaker 1: Yeah. Absolutely. And you know when I was in my twenties,

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I stayed at Motel five and a half. I mean

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I couldn't emplord Motel six. So I know where you're

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coming from.

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Speaker 2: Yeah. Now, when you were in sports betting, you developed

274
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a theory of increasing expected growth as a better theory

275
00:16:01,440 --> 00:16:06,200
then increasing expected value. So how did that work in

276
00:16:06,279 --> 00:16:11,919
sports and does that go well with investing in other things?

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Speaker 1: Well, in sports, really, you know your end goal is

278
00:16:17,960 --> 00:16:23,159
to increase the size of your bank roll, and the

279
00:16:23,240 --> 00:16:27,799
first step to doing that is finding positive expected value

280
00:16:27,879 --> 00:16:31,279
opportunities that are going to lead to winning more in

281
00:16:31,279 --> 00:16:36,440
the long term than you lose. But that the expected

282
00:16:36,519 --> 00:16:40,480
value of a bet or a play doesn't take into

283
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account the level of risk you have to endure. That's

284
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why there is such a thing as the Kelly criterion.

285
00:16:47,120 --> 00:16:51,399
Cally criterion says, Okay, if you have positive expected value,

286
00:16:51,559 --> 00:16:56,360
here's the optimal amount to stake on that bet, maybe

287
00:16:56,399 --> 00:16:59,759
one percent, three percent, five percent of your bank roll.

288
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But why is there an optimal amount? Why isn't ten

289
00:17:02,919 --> 00:17:04,960
percent of your bankroll better? A twenty percent of your

290
00:17:04,960 --> 00:17:08,960
bankroll better? Well, in terms of expected value, the most

291
00:17:09,039 --> 00:17:12,680
expected value you're going to get in terms of absolute

292
00:17:12,759 --> 00:17:15,559
dollars is if you find a big edge, you put

293
00:17:15,559 --> 00:17:17,400
one hundred percent of your bank roll on it, and

294
00:17:17,440 --> 00:17:21,000
that's the most expected value you can get. And obviously

295
00:17:21,039 --> 00:17:24,160
it only takes or one or two times or one

296
00:17:24,200 --> 00:17:27,440
time losing with one hundred percent of your bankroll on

297
00:17:27,480 --> 00:17:30,640
a play that you go bust and then you can't

298
00:17:30,680 --> 00:17:35,200
take advantage of any more plus EV opportunities. So the

299
00:17:35,839 --> 00:17:39,319
idea that you want to increase your expected bank roll

300
00:17:40,279 --> 00:17:43,640
actually takes into account the amount of risk that you're

301
00:17:43,680 --> 00:17:50,799
taking and balances it with the positive ev that you

302
00:17:50,880 --> 00:17:54,519
can get based on your edge. The same I didn't

303
00:17:54,559 --> 00:17:57,240
know it at the time when I first started looking

304
00:17:57,240 --> 00:18:00,960
into it, but the same principle exists in investing. It

305
00:18:01,160 --> 00:18:04,839
just goes by a different name called risk adjusted returns.

306
00:18:05,359 --> 00:18:09,000
So you can expect to get a certain return from

307
00:18:09,559 --> 00:18:12,799
like a mutual fund, a stock mutual fund, and say

308
00:18:12,839 --> 00:18:16,319
it's ten percent a year is your expected return. If

309
00:18:16,319 --> 00:18:21,160
that's coming from a stock mutual fund that it mostly has,

310
00:18:21,319 --> 00:18:24,279
you know, very large cap stocks and it doesn't move

311
00:18:24,319 --> 00:18:27,799
around very much from year to year, that may be

312
00:18:27,839 --> 00:18:30,160
a very good investment to put a lot of money in.

313
00:18:30,240 --> 00:18:34,960
Whereas another fund that also has ten percent expected returns

314
00:18:35,000 --> 00:18:39,240
per year but uses you know, micro like penny stocks

315
00:18:39,240 --> 00:18:42,839
that have huge volatility from year to year, that may

316
00:18:42,880 --> 00:18:44,960
not be a very good investment because you're not getting

317
00:18:45,000 --> 00:18:48,359
any more return for the risks that you have to bear.

318
00:18:48,759 --> 00:18:51,359
And it's really when you do the math. The math

319
00:18:51,599 --> 00:18:54,160
is identical in both situations.

320
00:18:55,079 --> 00:18:58,480
Speaker 3: Yeah, I think that. You know, the thing that people

321
00:18:58,680 --> 00:19:04,480
miss about Bett and Kelly is the variance part of

322
00:19:04,519 --> 00:19:08,119
the equation. Right, there's a big difference between if you're

323
00:19:08,160 --> 00:19:13,000
playing blackjack with a one percent edge, but your variance

324
00:19:13,079 --> 00:19:16,119
is only one point one. That's a big difference than

325
00:19:16,200 --> 00:19:19,160
having a one percent edge on a slot machine, where

326
00:19:19,200 --> 00:19:23,440
your variance might be you know, two hundred or something.

327
00:19:24,759 --> 00:19:29,640
Speaker 1: Oh absolutely, yes, that's really the key point is that

328
00:19:30,720 --> 00:19:35,440
you have to account for both, and the variance is

329
00:19:35,519 --> 00:19:39,960
going to hurt just about everybody. It's going there's gonna

330
00:19:39,960 --> 00:19:43,039
be one person that's really lucky. You know, you find

331
00:19:43,039 --> 00:19:46,079
one hundred people playing the slot machines, and one of

332
00:19:46,119 --> 00:19:49,200
them is going to be really lucky and take home

333
00:19:49,480 --> 00:19:54,119
a huge payday. The other ninety nine are not, And

334
00:19:54,240 --> 00:19:57,440
so if you're not the luckiest of the bunch, the

335
00:19:57,559 --> 00:19:59,599
variance is going to hurt you a lot more than

336
00:19:59,599 --> 00:20:00,759
it helps.

337
00:20:01,359 --> 00:20:07,160
Speaker 2: Well, one thing about Kelly and sports betting is if

338
00:20:07,240 --> 00:20:12,160
you can if you're if your formula says you should bet,

339
00:20:13,440 --> 00:20:18,480
however many dollars, you often can't get that many dollars down.

340
00:20:19,039 --> 00:20:25,160
You might be limited by by either the book's that big,

341
00:20:25,319 --> 00:20:28,519
or they can limit you personally to you can bet

342
00:20:28,519 --> 00:20:32,119
any amount you want up to ninety nine cents.

343
00:20:32,720 --> 00:20:35,960
Speaker 3: Does that get I remember when Elihu was on the

344
00:20:36,000 --> 00:20:39,400
show and he said, at some point, Kelly just doesn't

345
00:20:39,440 --> 00:20:42,720
matter anymore because, basically because of the limits, once your

346
00:20:42,759 --> 00:20:46,079
bank roll is big enough, you you could never bet

347
00:20:46,240 --> 00:20:50,000
as much as you wanted because the sports books just

348
00:20:50,039 --> 00:20:50,720
won't take it.

349
00:20:52,079 --> 00:20:56,960
Speaker 1: Yes, that's that's very true. And you know that most

350
00:20:56,960 --> 00:21:00,160
of the recreational sports books do a pretty good job

351
00:21:00,279 --> 00:21:03,799
of figuring out who's sharp and who's not and limiting

352
00:21:03,839 --> 00:21:09,359
them specifically, like Bob was talking about. But even beyond that,

353
00:21:09,440 --> 00:21:12,160
you know that they have limits that everybody has to

354
00:21:12,200 --> 00:21:15,640
adhere to. They're just not willing to take whatever you

355
00:21:15,680 --> 00:21:20,160
want to plunk down. So that is a big factor.

356
00:21:20,200 --> 00:21:22,240
And when you get to the point where you have

357
00:21:22,279 --> 00:21:26,400
a very large bank roll, then Kelly doesn't really come

358
00:21:26,440 --> 00:21:29,279
into play because you're just not able to get down

359
00:21:29,319 --> 00:21:32,759
as much as you want. But it's very interesting when

360
00:21:32,799 --> 00:21:37,319
I've watched or listened to a lot of professional sports

361
00:21:37,319 --> 00:21:40,680
betters talk about how they got their start and what

362
00:21:40,759 --> 00:21:43,359
they do now. A lot of them get their start

363
00:21:43,480 --> 00:21:48,559
by doing arbitrage betting or middling where you'll bet on

364
00:21:49,720 --> 00:21:52,880
both sides of the game at different spreads, and if

365
00:21:52,880 --> 00:21:57,039
the spread, if the game difference falls just right, you

366
00:21:57,119 --> 00:21:59,799
win both bets. But most of the time you win one,

367
00:21:59,839 --> 00:22:03,599
you lose one. That's how they got their start, and

368
00:22:03,640 --> 00:22:07,359
those are much lower risk type of plays than just

369
00:22:07,440 --> 00:22:11,640
betting on positive ev bets. And they built up their

370
00:22:11,640 --> 00:22:13,839
bank rolls that way, and then when their bank rolls

371
00:22:13,920 --> 00:22:17,000
got to be so big that they couldn't get down

372
00:22:17,039 --> 00:22:20,000
as much as they wanted to anymore, the light bulb

373
00:22:20,079 --> 00:22:22,240
went off and they said, Hey, why am I arbitrage

374
00:22:22,279 --> 00:22:25,519
betting when I've got value on one side and I'm

375
00:22:25,880 --> 00:22:27,799
losing value on the other side. Why don't I just

376
00:22:27,839 --> 00:22:30,799
bet the side that only has value. Well, that's exactly

377
00:22:30,839 --> 00:22:33,319
the point in time when you should make that switch,

378
00:22:33,759 --> 00:22:35,640
when you can't get that as much as you want

379
00:22:35,680 --> 00:22:38,119
to anymore, So you just bet the value side. You

380
00:22:38,160 --> 00:22:40,720
don't have to worry about Kelly criterion because you're never

381
00:22:40,759 --> 00:22:41,799
going to get that much down.

382
00:22:42,720 --> 00:22:44,119
Speaker 3: Yeah.

383
00:22:44,279 --> 00:22:47,680
Speaker 2: So arbing is a form of hedging your bets. Are

384
00:22:47,720 --> 00:22:51,759
there in the financial markets or is it right to

385
00:22:51,880 --> 00:22:52,480
headge your bets?

386
00:22:52,559 --> 00:22:56,559
Speaker 1: Sometimes it certainly is, But it's a lot harder to do.

387
00:22:57,160 --> 00:22:59,680
You know, back in like the sixties and the seventies,

388
00:23:00,079 --> 00:23:03,720
and people like Ed Thorpe were starting with hedge funds.

389
00:23:04,519 --> 00:23:09,640
That's what they did is they would find mispriced options

390
00:23:10,519 --> 00:23:14,119
and they would load up on them, and then to

391
00:23:14,160 --> 00:23:17,799
reduce their risk, they would either buy or short sell

392
00:23:17,880 --> 00:23:22,200
the underlying stock, figuring that that was a pretty efficient market.

393
00:23:22,279 --> 00:23:25,279
They might lose a tiny little bit of value on

394
00:23:25,440 --> 00:23:27,880
the stock side, but they would make a ton of

395
00:23:27,960 --> 00:23:30,839
value on the option side, and the risk would even out.

396
00:23:32,079 --> 00:23:36,119
And that was very successful for a while until in

397
00:23:36,160 --> 00:23:39,839
the nineteen seventies the Black Shoals formula got published and

398
00:23:39,880 --> 00:23:42,799
then everybody could figure out how to value options correctly,

399
00:23:42,839 --> 00:23:45,920
and that became much harder to do. So it's actually

400
00:23:45,960 --> 00:23:51,000
a lot easier to do a true arbitrage in sports

401
00:23:51,000 --> 00:23:56,079
betting than it is in investing, because in investing, you know,

402
00:23:56,119 --> 00:23:58,400
when you go to buy a particular stock, there's only

403
00:23:58,440 --> 00:24:01,160
one place to buy it, right it's either listed on

404
00:24:01,200 --> 00:24:06,680
the New York socc Exchange or on the Nasdaq. And

405
00:24:07,000 --> 00:24:10,079
in sports betting there's so many different books to choose from,

406
00:24:10,559 --> 00:24:13,680
so you can can often find odds of one book

407
00:24:13,720 --> 00:24:16,519
that are really good on team A. Another book, they're

408
00:24:16,519 --> 00:24:18,680
really good on team B, and then you can form

409
00:24:18,720 --> 00:24:19,839
an arbitrage that way.

410
00:24:20,880 --> 00:24:24,559
Speaker 3: So the one thing that seemed to be not talked

411
00:24:24,599 --> 00:24:30,240
about much was the whole tax implications of you know,

412
00:24:30,279 --> 00:24:35,519
when you talked about rebalancing your portfolio, Well, there's a

413
00:24:35,680 --> 00:24:41,400
huge cost if you're in a regular brokerage account. There's

414
00:24:41,440 --> 00:24:45,880
a huge cost to rebalancing if you have a gain

415
00:24:45,960 --> 00:24:49,680
on something that you now want to take your position

416
00:24:49,839 --> 00:24:51,880
down to a lower amount.

417
00:24:52,960 --> 00:24:56,119
Speaker 1: Yeah, you're absolutely right, And you know, I'm not a

418
00:24:56,240 --> 00:24:59,759
tax professional, so I steered clear of trying to give

419
00:24:59,759 --> 00:25:03,480
any sort of tax advice in the book. But you're

420
00:25:03,519 --> 00:25:07,519
absolutely right, and that type of technique is going to

421
00:25:07,599 --> 00:25:10,440
work much better in a tax advantage account like an

422
00:25:10,440 --> 00:25:13,680
IRA or a four oh one K, as long as

423
00:25:13,680 --> 00:25:16,839
you don't have any you know, high transaction costs in those.

424
00:25:17,920 --> 00:25:20,519
And it's the kind of thing that could also work

425
00:25:20,559 --> 00:25:26,799
in an ETF. They're they're already loads of ETFs that

426
00:25:27,079 --> 00:25:31,599
are set up to do you know, two times leverage

427
00:25:31,680 --> 00:25:34,680
or three times leverage of some sort of index like

428
00:25:34,759 --> 00:25:37,599
the either the Nasdaq or the S and P five hundred,

429
00:25:38,279 --> 00:25:42,240
or even of individual stocks and they're trading every single

430
00:25:42,359 --> 00:25:46,400
day in order to reset that leverage because you know,

431
00:25:46,480 --> 00:25:49,640
the as the stock or the or the index goes

432
00:25:49,720 --> 00:25:52,680
up and down, the amount that they need to hold

433
00:25:53,079 --> 00:25:56,440
of the underlying stocks versus the swaps that they use

434
00:25:56,559 --> 00:25:59,440
to get the leverage changes every day, so they have

435
00:25:59,519 --> 00:26:02,000
to reapback balance every day. Now, they're not turning over

436
00:26:02,039 --> 00:26:05,400
the whole portfolio, they're only trading a little bit, but

437
00:26:05,440 --> 00:26:08,720
they're doing it every day. And the type of rebalancing

438
00:26:08,759 --> 00:26:11,039
that I was modeling is the same sort of thing

439
00:26:11,079 --> 00:26:14,839
where you're not turning over the entire portfolio. We're trading

440
00:26:14,839 --> 00:26:18,880
a little bit every day to essentially adjust the leverage

441
00:26:18,920 --> 00:26:22,839
that you have based on the market conditions.

442
00:26:23,400 --> 00:26:26,079
Speaker 3: Yeah. I was faced with this situation a couple of

443
00:26:26,119 --> 00:26:29,839
months ago where I had, you know, a bunch of

444
00:26:29,880 --> 00:26:35,559
silver which had exploded, and because some of it was

445
00:26:35,720 --> 00:26:41,960
in a broker not a taxible brokerage account, you know, I,

446
00:26:42,039 --> 00:26:44,680
you know, I wanted to rebalance, but I was not

447
00:26:44,880 --> 00:26:47,720
willing to pay the capital gains tax to do it.

448
00:26:48,000 --> 00:26:52,960
And you know, I knew that I could buy puts,

449
00:26:53,240 --> 00:26:56,519
which is basically an option that is like a beat

450
00:26:56,599 --> 00:27:00,039
that silver will go down, but if I do that

451
00:27:00,319 --> 00:27:02,279
and I'm correct, well then I have to pay the

452
00:27:02,319 --> 00:27:05,599
tax on the put, which is now a short term

453
00:27:05,640 --> 00:27:10,160
capital gain, which is even worse. Right, So yeah, it's

454
00:27:10,400 --> 00:27:15,559
it's it's very difficult to do those things in taxable accounts,

455
00:27:15,920 --> 00:27:18,799
which so basically, you know, I followed ed Thorpe and

456
00:27:18,880 --> 00:27:22,559
Wren Buffett's advice to you know, just buy the index

457
00:27:22,640 --> 00:27:23,759
and let it sit there.

458
00:27:25,480 --> 00:27:29,880
Speaker 1: Yeah, I mean for taxable accounts, you absolutely have to

459
00:27:29,920 --> 00:27:34,799
take that into account. And and and when you're doing

460
00:27:34,799 --> 00:27:38,680
it yourself like that, passive investing has a lot of advantages.

461
00:27:39,680 --> 00:27:44,720
Speaker 2: Yeah, in your earlier writings on sports betting, you used

462
00:27:44,799 --> 00:27:47,319
a route unit staking system.

463
00:27:48,240 --> 00:27:49,680
Speaker 1: So what is that?

464
00:27:49,839 --> 00:27:54,240
Speaker 2: And does that have an analog in the investing in

465
00:27:54,279 --> 00:27:55,599
other things world?

466
00:27:57,720 --> 00:28:01,359
Speaker 1: So that's a staking system where you decide how much

467
00:28:01,400 --> 00:28:07,640
you're going to bet based on the difference in odds

468
00:28:07,680 --> 00:28:13,200
from basically an even money bet, and so you take

469
00:28:13,359 --> 00:28:17,319
the square root of that difference and you divide your

470
00:28:17,319 --> 00:28:20,240
bet by that amount. In other words, if you're if

471
00:28:20,279 --> 00:28:24,640
you're normally betting, say one hundred dollars at even money,

472
00:28:25,519 --> 00:28:29,039
and then you find a bet at plus four hundred,

473
00:28:29,079 --> 00:28:32,799
so it's four to one odds, you would divide your

474
00:28:32,839 --> 00:28:36,039
bet size by the square root of four, which is two,

475
00:28:36,240 --> 00:28:39,680
so you would bet fifty dollars on that. Conversely, if

476
00:28:39,720 --> 00:28:42,519
you're going to bet at something at minus four hundred,

477
00:28:43,319 --> 00:28:47,839
you would divide by the square root of one quarter,

478
00:28:48,200 --> 00:28:52,039
so dividing by a half, multiplying by two, you would

479
00:28:52,079 --> 00:28:57,440
bet two hundred dollars. And essentially the way it works

480
00:28:57,559 --> 00:29:00,839
is that if you're in a type of market where

481
00:29:00,599 --> 00:29:03,640
you have a pretty good idea of what your edge

482
00:29:03,839 --> 00:29:07,519
is at even money bets, but you're not sure how

483
00:29:07,640 --> 00:29:12,119
much the edge will change for bets at different odds,

484
00:29:12,440 --> 00:29:16,799
if you follow this system, you're essentially mimicking what the

485
00:29:16,880 --> 00:29:20,680
Kelly criteria would tell you to bet based on those odds,

486
00:29:20,799 --> 00:29:24,240
because normally you'll find a bigger edge at the plus

487
00:29:24,279 --> 00:29:27,880
money odds and a smaller edge for the minus money odds.

488
00:29:28,880 --> 00:29:32,920
Speaker 3: You know, a mistake that I a lot of gamblers make,

489
00:29:33,160 --> 00:29:37,839
or people who are even our professional gamblers, is they

490
00:29:37,880 --> 00:29:42,359
do not want to lay a big price. They you know,

491
00:29:42,480 --> 00:29:46,839
they really hate the idea of, you know, laying eight

492
00:29:46,880 --> 00:29:51,720
to one on something because if I lose, I lose eight,

493
00:29:51,880 --> 00:29:54,160
but if I win, I only win one. But what

494
00:29:54,200 --> 00:29:57,480
they're forgetting is you're supposed to win seven out of

495
00:29:57,480 --> 00:30:01,799
eight times when you do that, So yes, you are

496
00:30:02,279 --> 00:30:06,000
losing the eight when you lose, but seven or eight

497
00:30:06,039 --> 00:30:10,720
times you're winning one. So yeah, it's just interesting that

498
00:30:11,200 --> 00:30:15,839
even people who are professionals who should understand these things,

499
00:30:15,920 --> 00:30:19,000
it's hard to not let your emotions take over with

500
00:30:19,119 --> 00:30:20,240
those decisions.

501
00:30:21,119 --> 00:30:24,359
Speaker 1: Yeah, it really is, because you know, our intuition gets

502
00:30:24,400 --> 00:30:30,079
built up from other experiences, and then it just feels wrong.

503
00:30:30,559 --> 00:30:33,640
It feels wrong to risk that much money, even though,

504
00:30:33,680 --> 00:30:35,359
like you said, you're going to win seven out of

505
00:30:35,359 --> 00:30:38,839
eight times. So occasionally you will lose and it will

506
00:30:38,880 --> 00:30:42,359
really hurt, but you know you're going to rebound because

507
00:30:42,400 --> 00:30:44,319
you know you keep doing it. You win seven out

508
00:30:44,319 --> 00:30:46,799
of eight times, and when you look at it from

509
00:30:46,799 --> 00:30:53,759
the lens of expected growth or risk adjusted returns, because

510
00:30:53,880 --> 00:30:57,799
those kind of vets have much lower risk, right, you're

511
00:30:57,799 --> 00:31:00,480
only going to lose one out of eight times. If

512
00:31:00,519 --> 00:31:04,240
you can get the same edge that you could add

513
00:31:04,559 --> 00:31:07,440
for an even money bet, those kind of minus eight

514
00:31:07,519 --> 00:31:10,680
hundred bets are way more valuable. You will build your

515
00:31:10,720 --> 00:31:15,279
bank roll much quicker with those kind of bets, and

516
00:31:15,480 --> 00:31:17,880
because of that, you usually don't see that big of

517
00:31:17,920 --> 00:31:20,240
an edge when it's at minus eight hundred. As a

518
00:31:20,240 --> 00:31:22,119
matter of fact, that you know, there's a certain limit

519
00:31:22,759 --> 00:31:25,400
to how big the edge could possibly be, right, because

520
00:31:25,440 --> 00:31:27,599
you could only you can only win one hundred percent

521
00:31:27,640 --> 00:31:30,079
of the time. You can't win more than more than that.

522
00:31:31,039 --> 00:31:34,640
But I actually did an article for Pinnacle a couple

523
00:31:34,720 --> 00:31:37,680
of months ago talking about that exact subject, where there

524
00:31:37,759 --> 00:31:42,920
was a betting service basically that kind of broke down

525
00:31:43,680 --> 00:31:48,119
the profit that they made on their sharp bets by

526
00:31:48,519 --> 00:31:51,279
what the odds were. They put them in certain groups,

527
00:31:51,759 --> 00:31:54,319
and they found that the vast majority of their profits

528
00:31:54,920 --> 00:31:58,359
came from betting these short odds bets, you know, like

529
00:31:58,400 --> 00:32:02,279
the equivalent of minus four hundreds five hundred type of odds,

530
00:32:02,319 --> 00:32:05,319
because they were able to find decent edges there and

531
00:32:05,359 --> 00:32:07,839
the risk was so low that you know, when you

532
00:32:07,960 --> 00:32:10,599
state them properly, you can make much more profit.

533
00:32:11,759 --> 00:32:14,359
Speaker 3: Right. And the reason that the edge is there is

534
00:32:14,400 --> 00:32:17,119
because the public all wants to take the other side

535
00:32:17,119 --> 00:32:19,000
of that. They want to bet a little and win

536
00:32:19,079 --> 00:32:24,720
a lot, and it forces the price in that direction

537
00:32:24,960 --> 00:32:27,519
for the person taking the other side.

538
00:32:28,200 --> 00:32:32,119
Speaker 1: Yeah, absolutely, I mean the book makers, you know, people

539
00:32:32,160 --> 00:32:35,400
think that a bookmaker wants to make the same amount

540
00:32:35,440 --> 00:32:40,079
of profit whether the favorite wins or the or the

541
00:32:40,119 --> 00:32:43,200
long shot the underdog wins. But that's not really true

542
00:32:43,400 --> 00:32:47,519
because they take a lot more liability on those long shots.

543
00:32:47,559 --> 00:32:50,839
When the long shots come in, you know, they're putting

544
00:32:50,839 --> 00:32:52,799
out an awful lot of cash because a lot of

545
00:32:52,799 --> 00:32:55,640
the public is on them rather than the favorite.

546
00:32:57,319 --> 00:32:59,359
Speaker 2: So if the Raiders win the Super Bowl next year,

547
00:32:59,400 --> 00:33:00,920
the books are really going to take a bath.

548
00:33:02,480 --> 00:33:06,920
Speaker 1: Yeah, yeah, because I'm sure and now the books are

549
00:33:07,039 --> 00:33:09,119
they're not quite as dumb as they look, you know,

550
00:33:09,160 --> 00:33:10,759
the even the soft.

551
00:33:10,799 --> 00:33:12,759
Speaker 3: It depends on which one you're talking about.

552
00:33:15,480 --> 00:33:19,240
Speaker 1: But they they build in what people call the favorite

553
00:33:19,240 --> 00:33:22,240
long shot bias, so that if if the Raiders have

554
00:33:22,559 --> 00:33:25,559
like azer point one percent chance of winning the Super

555
00:33:25,559 --> 00:33:29,519
Bowl next year, then you know, the fair odds would

556
00:33:29,559 --> 00:33:32,039
be a thousand to one, right, But they're only going

557
00:33:32,079 --> 00:33:34,200
to pay you like two hundred to one if the

558
00:33:34,279 --> 00:33:38,480
Raiders win, because they they they want to protect themselves

559
00:33:38,519 --> 00:33:42,400
from those you know, big outlays, and that gets baked

560
00:33:42,440 --> 00:33:46,559
into these these lines in a very consistent way. And

561
00:33:46,640 --> 00:33:50,839
people have been noticing this phenomenon for decades and they

562
00:33:50,880 --> 00:33:53,440
call it the favorite long shot bias. And one of

563
00:33:53,480 --> 00:33:55,960
the things that I looked at in my first book,

564
00:33:56,799 --> 00:34:00,200
which is but how Much did You Lose, is the

565
00:34:00,240 --> 00:34:02,720
fact that when you look at it in terms of

566
00:34:02,799 --> 00:34:06,839
expected value, it does look like a bias those bookman

567
00:34:06,839 --> 00:34:09,679
because they're asking for a lot more expected value from

568
00:34:09,719 --> 00:34:12,639
the better for these long shots than they are from

569
00:34:12,639 --> 00:34:15,000
the favorites. But if you look at it in terms

570
00:34:15,039 --> 00:34:18,639
of expected growth from the bookmaker's point of view, and

571
00:34:18,679 --> 00:34:22,360
you adjust for the risk that they're taking, it actually

572
00:34:22,400 --> 00:34:25,679
works out to be exactly the same for favorites and

573
00:34:25,800 --> 00:34:29,079
long shots, no matter how long the long shot is.

574
00:34:29,480 --> 00:34:33,280
So they're getting the same type of expected growth from

575
00:34:33,280 --> 00:34:35,880
a plus four hundred long shot and a plus one

576
00:34:35,920 --> 00:34:38,800
thousand long shot and a plus five thousand long shot

577
00:34:38,960 --> 00:34:44,159
because they keep shortening the pay the shortening the offered

578
00:34:44,199 --> 00:34:48,000
odds compared to what the true odds should be to

579
00:34:48,159 --> 00:34:53,039
keep that expected growth constant. And same thing with the favorites.

580
00:34:53,320 --> 00:34:57,000
They give you a smaller edge for a minus one

581
00:34:57,079 --> 00:35:00,320
thousand than they would for a minus two hundred, but

582
00:35:00,360 --> 00:35:04,119
the expected growth from their perspective winds up being the same.

583
00:35:05,400 --> 00:35:10,519
Speaker 2: Now you've mentioned a few times that the big key

584
00:35:10,760 --> 00:35:14,159
in making your bets or investments is making sure you're

585
00:35:14,159 --> 00:35:19,079
the favorite, making sure you have the advantage. So the

586
00:35:19,199 --> 00:35:22,920
question becomes, how do you know if you have the

587
00:35:23,000 --> 00:35:23,920
advantage or not?

588
00:35:26,000 --> 00:35:30,360
Speaker 1: That is a great question and sports betting, the best

589
00:35:30,400 --> 00:35:33,199
way to know whether you have the advantage is if

590
00:35:33,239 --> 00:35:37,840
you have closing line value, which means that when the

591
00:35:38,000 --> 00:35:41,679
bet change, when the odds on that bet right before

592
00:35:41,719 --> 00:35:45,679
the game starts are shorter than the odds that you

593
00:35:45,800 --> 00:35:50,559
betted at, and they're shorter by enough to overcome the big,

594
00:35:51,440 --> 00:35:57,480
then you can tell that, assuming that that closing line

595
00:35:57,800 --> 00:36:01,960
is accurate, that you've got the edge. Now the question

596
00:36:02,079 --> 00:36:05,960
is is the closing line accurate? Well, for highly liquid

597
00:36:06,000 --> 00:36:10,880
markets that get bet back and forth many, many times,

598
00:36:11,559 --> 00:36:15,440
there's tons of evidence to show that those closing lines

599
00:36:15,559 --> 00:36:20,159
on average are accurate because people model it and say, okay,

600
00:36:20,199 --> 00:36:22,559
what if I were to bet at the closing line

601
00:36:22,800 --> 00:36:25,519
without any margin, you know, take out the big, but

602
00:36:25,599 --> 00:36:27,840
I bet at that closing line, and I bet ten

603
00:36:27,920 --> 00:36:32,000
thousand times, I should expect to make exactly zero profit

604
00:36:32,280 --> 00:36:36,599
if those odds are accurate, and they run these models

605
00:36:36,599 --> 00:36:39,880
and analyzes and they come out making basically zero dollars.

606
00:36:40,400 --> 00:36:45,599
So in sports betting. That's a really really good indicator

607
00:36:46,199 --> 00:36:49,039
in investing, Like in the stock market, there is no

608
00:36:49,159 --> 00:36:52,920
indicator like that. If people could could find that kind

609
00:36:52,960 --> 00:36:56,400
of indicator for a stock market or other type of

610
00:36:56,440 --> 00:36:59,360
financial investing, that would be huge.

611
00:36:59,480 --> 00:37:02,519
Speaker 3: Well, there is an indicator, right, I mean, over one

612
00:37:02,599 --> 00:37:07,440
hundred plus years, the stock market games. Right. The only

613
00:37:07,559 --> 00:37:11,880
question is if you're going to try to get on

614
00:37:12,039 --> 00:37:15,320
and off the bus that's going up the hill, and

615
00:37:15,719 --> 00:37:17,880
if you could do better than if you just stayed

616
00:37:17,960 --> 00:37:21,480
on the bus to start with and get to the

617
00:37:21,480 --> 00:37:24,360
top of the hill, right, I mean, so you have

618
00:37:24,440 --> 00:37:27,559
an edge. The question is could you have a bigger

619
00:37:27,679 --> 00:37:36,679
edge by somehow making specific picks or timing or things

620
00:37:36,760 --> 00:37:37,159
like that.

621
00:37:38,079 --> 00:37:42,159
Speaker 1: Yes, that's the key is that over the past hundred years,

622
00:37:42,840 --> 00:37:45,559
you know, the market has gone up. There's no reason

623
00:37:45,559 --> 00:37:47,719
to believe that over the next hundred years it won't.

624
00:37:47,840 --> 00:37:50,639
But that's that means if you own the whole market,

625
00:37:51,320 --> 00:37:54,519
spread out amongst thousands and thousands of stocks, like a

626
00:37:54,599 --> 00:37:57,679
lot of these index passive index funds will do for you,

627
00:37:58,440 --> 00:38:00,880
then you have an edge. But some people aren't satisfied

628
00:38:00,920 --> 00:38:03,840
with that. They want a bigger edge, and they spend

629
00:38:03,840 --> 00:38:06,119
a lot of time trying to figure out which stocks

630
00:38:06,159 --> 00:38:07,679
are going to go up and which stocks are going

631
00:38:07,719 --> 00:38:12,239
to go down. And maybe they're right, maybe they're wrong,

632
00:38:12,480 --> 00:38:16,800
but the academic research all says that the majority of

633
00:38:16,840 --> 00:38:21,280
them are wrong more than they're right, and the ones

634
00:38:21,599 --> 00:38:26,039
that are right more than they're wrong change every year, right, Like,

635
00:38:26,119 --> 00:38:28,639
maybe your picks will work this year, and Bob's picks

636
00:38:28,639 --> 00:38:30,480
will work next year, and my picks will work the

637
00:38:30,559 --> 00:38:34,880
year after that, but by then your picks have now

638
00:38:34,920 --> 00:38:38,800
gone bad when my picks are going good. So and

639
00:38:38,880 --> 00:38:42,599
you had fees on top of that for investment managers

640
00:38:42,599 --> 00:38:48,039
who are trying these techniques, and there's really ends up

641
00:38:48,039 --> 00:38:51,639
being no more edge. The edge, whatever little edge there

642
00:38:51,760 --> 00:38:54,239
is gets eaten up by the fees for the managers

643
00:38:54,639 --> 00:38:58,039
and does not usually make it down to the actual investors.

644
00:38:59,159 --> 00:39:01,559
So that's what I mean. There's no indicator for the

645
00:39:01,599 --> 00:39:04,320
whole market. Yeah, there's an indicator if you want to

646
00:39:04,320 --> 00:39:07,800
pick like Microsoft and say, oh, you know, I'm confident

647
00:39:07,840 --> 00:39:11,480
that Microsoft is undervalued and I'm going to buy them,

648
00:39:12,079 --> 00:39:15,239
and in ten years, you know, I'll make ten percent

649
00:39:15,280 --> 00:39:18,079
a year. Well maybe you will, maybe you won't, but

650
00:39:18,199 --> 00:39:21,400
ten years isn't even close to long enough to figure

651
00:39:21,400 --> 00:39:23,639
out whether you really did have an edge when you

652
00:39:23,679 --> 00:39:27,599
bought it, because there's so much noise in the price

653
00:39:27,639 --> 00:39:32,880
of these stocks over time that you know. It's like

654
00:39:33,079 --> 00:39:35,880
it's like making, you know, twenty bets at the blackjack

655
00:39:35,960 --> 00:39:38,239
table and saying, oh, well, I'm up one hundred dollars,

656
00:39:38,239 --> 00:39:42,079
I must have an edge. Right, That's not how it works.

657
00:39:42,280 --> 00:39:44,360
Speaker 2: I want to go back to when we were talking

658
00:39:44,400 --> 00:39:49,320
about beating the closing line value. It sounded to me,

659
00:39:49,440 --> 00:39:51,920
I'm not a sports better, but it sounded to me

660
00:39:52,159 --> 00:39:56,639
like when the line closes, you're going to know whether

661
00:39:56,719 --> 00:40:00,800
or not you had this edge. But assuming you make

662
00:40:00,840 --> 00:40:05,039
your line, you make your bets before the line closes,

663
00:40:05,840 --> 00:40:07,800
then you're not going to know if you have the

664
00:40:07,840 --> 00:40:14,039
advantage or not until sometime later. So if you don't

665
00:40:14,079 --> 00:40:18,119
know if you have the advantage or not until sometime later,

666
00:40:18,280 --> 00:40:22,719
it seems difficult to figure out whether you should bet

667
00:40:22,800 --> 00:40:25,079
or not or how much because you don't know what

668
00:40:25,119 --> 00:40:25,599
you're edged.

669
00:40:26,760 --> 00:40:30,639
Speaker 1: Yep, you're absolutely right. It is difficult to figure that out.

670
00:40:31,199 --> 00:40:37,320
There's basically two techniques that get used commonly to figure

671
00:40:37,400 --> 00:40:40,480
that out, or at least approximated as best you can.

672
00:40:41,360 --> 00:40:46,599
One is called bottom up technique, where basically you handicap

673
00:40:46,679 --> 00:40:50,159
the game. You take into account all the factors that

674
00:40:50,239 --> 00:40:53,679
you think are going to affect the correct odds or

675
00:40:53,719 --> 00:40:58,079
the correct spread, and if the odds or the spread

676
00:40:58,159 --> 00:41:01,800
that the sportsbooks are offering is is better than what

677
00:41:02,320 --> 00:41:06,280
you predict, you make the bet. Now, you don't know

678
00:41:06,320 --> 00:41:09,800
if that stingle bet is going to have an edge

679
00:41:11,039 --> 00:41:12,920
when you make it, Like you said, you don't know

680
00:41:13,199 --> 00:41:16,559
until the line closes. But if you keep track of

681
00:41:16,599 --> 00:41:20,440
them and over the course of six months, you know

682
00:41:20,559 --> 00:41:23,119
you get closing line value on eighty to eighty five

683
00:41:23,159 --> 00:41:27,000
percent of your bets, then probably what you're doing is

684
00:41:27,039 --> 00:41:29,960
working and you can kind of gauge how big that

685
00:41:30,119 --> 00:41:35,039
edge is based on that track record. The other way

686
00:41:35,039 --> 00:41:38,440
to do it is called top down betting, where you

687
00:41:39,199 --> 00:41:42,840
basically look at the market as a whole and you

688
00:41:43,039 --> 00:41:48,159
monitor what kind of odds are being offered, and particularly

689
00:41:48,199 --> 00:41:51,039
pay attention to the sharp sports books and when they

690
00:41:51,239 --> 00:41:55,320
change their line and there's a reasonable limit that they're

691
00:41:55,360 --> 00:42:00,119
offering at the time, that basically indicates that somebody sharp

692
00:42:00,159 --> 00:42:04,039
has bet on that site they moved the line in

693
00:42:04,280 --> 00:42:08,119
response to that, and so like if they were offering

694
00:42:08,239 --> 00:42:12,760
plus one fifty on a baseball money line, and they

695
00:42:12,800 --> 00:42:15,880
moved down the plus one twenty, and you look around

696
00:42:15,880 --> 00:42:18,440
and some of the other sportsbooks still have plus one fifty.

697
00:42:19,159 --> 00:42:21,840
That's a pretty good indication that the plus one fifty

698
00:42:21,920 --> 00:42:24,920
is a good value bet and you should go bet

699
00:42:24,920 --> 00:42:29,840
it there. And typically you got to do it quickly

700
00:42:30,039 --> 00:42:33,039
because it's not going to last. They're going to start

701
00:42:33,039 --> 00:42:35,239
taking bets at plus one fifty and then they're going

702
00:42:35,280 --> 00:42:38,280
to move their line. So it's always a race when

703
00:42:38,320 --> 00:42:40,599
you're doing top down betting, but it is a very

704
00:42:40,639 --> 00:42:41,719
effective way to do it.

705
00:42:42,440 --> 00:42:46,079
Speaker 3: But it's also a way to get your accounts limited severely,

706
00:42:46,400 --> 00:42:51,559
very quickly, because they know that that's what you're doing.

707
00:42:51,800 --> 00:42:55,039
The other problem, though, with the bottom up is you

708
00:42:55,079 --> 00:42:58,760
know you could build a model and be making good

709
00:42:58,800 --> 00:43:03,480
bets and do well this season, and next season your

710
00:43:03,599 --> 00:43:06,480
edge may not may be gone and you don't know

711
00:43:06,559 --> 00:43:10,679
it because things have changed, and you know, you can

712
00:43:10,760 --> 00:43:15,000
end up losing a bunch of money while you're realizing that, oh,

713
00:43:15,239 --> 00:43:17,599
looks like my edge is gone.

714
00:43:17,960 --> 00:43:21,159
Speaker 1: Yeah, that's a big risk, and a lot of these

715
00:43:21,440 --> 00:43:26,079
kind of handicappers or modelers experienced that, and you know,

716
00:43:26,119 --> 00:43:28,679
if you can trust the closing line. It's going to

717
00:43:28,760 --> 00:43:32,559
be a help. But even still, your your edge can

718
00:43:32,599 --> 00:43:35,440
disappear and you don't know it, and that's a that's

719
00:43:35,480 --> 00:43:36,199
a big problem.

720
00:43:37,239 --> 00:43:41,920
Speaker 3: Anyway, Thanks Dan, this has been great enjoyed talking about it.

721
00:43:41,960 --> 00:43:44,920
I hope you do well with the book. I have

722
00:43:45,039 --> 00:43:49,760
one question before before we go. Favorite restaurant in Las

723
00:43:49,840 --> 00:43:51,519
Vegas that's not in a casino.

724
00:43:53,960 --> 00:43:57,239
Speaker 1: Gosh, I should have prepared for this. It's been to

725
00:43:57,320 --> 00:44:02,079
warn you. You should have. Yeah. God, it's been a

726
00:44:02,079 --> 00:44:04,440
long time since I've been in Las Vegas, but there

727
00:44:04,559 --> 00:44:08,079
was a rom and place that I went to with

728
00:44:08,119 --> 00:44:09,880
a friend of mine the last time I was there,

729
00:44:10,679 --> 00:44:12,800
and I don't know. I'll have to get back to

730
00:44:12,800 --> 00:44:13,880
you on the name.

731
00:44:14,760 --> 00:44:17,559
Speaker 3: Okay, so you're not coming out for the World Series

732
00:44:17,559 --> 00:44:17,960
this year?

733
00:44:18,679 --> 00:44:24,159
Speaker 1: No, No, it's it's it's too much of a hurdle

734
00:44:24,199 --> 00:44:30,039
to play those events, even the smaller events. They're like

735
00:44:30,039 --> 00:44:33,239
a three day event, and so if you're going to

736
00:44:33,320 --> 00:44:35,559
make any money at it, you've got to be prepared

737
00:44:35,599 --> 00:44:38,199
to play, you know, twelve hours a day for three

738
00:44:38,280 --> 00:44:41,159
days straight. Those days are behind me.

739
00:44:42,199 --> 00:44:45,519
Speaker 2: And my last question before we go is who is

740
00:44:45,559 --> 00:44:47,599
the intended audience for your book.

741
00:44:48,800 --> 00:44:52,320
Speaker 1: Well, the first book was really meant for sharp sports

742
00:44:52,360 --> 00:44:55,800
betters specifically, or people trying to become sharp sports betters,

743
00:44:56,440 --> 00:44:59,079
to give them kind of guidance as to what was

744
00:44:59,199 --> 00:45:04,920
important and how to accelerate their bankroll growth. The new book,

745
00:45:04,960 --> 00:45:10,480
Sharp Money, is really for anybody interested in investing, and

746
00:45:10,840 --> 00:45:14,119
you know their statistic to say, at least, you know,

747
00:45:14,199 --> 00:45:18,760
sixty percent of Americans have some sort of retirement account

748
00:45:19,559 --> 00:45:22,199
which is going to be invested in something. So you've

749
00:45:22,199 --> 00:45:23,760
got to figure out what are you going to invest

750
00:45:23,840 --> 00:45:27,760
it in and how are you going to evaluate whether

751
00:45:27,760 --> 00:45:30,719
that's a good investment. And you know, part of the

752
00:45:30,719 --> 00:45:34,719
book is about how to kind of rebalance your portfolio

753
00:45:34,480 --> 00:45:38,119
to optimize it. But a lot of the subjects in

754
00:45:38,159 --> 00:45:42,760
there talk about things like the correlation between different assets

755
00:45:43,320 --> 00:45:46,119
and get it make sure, making sure that you get

756
00:45:46,360 --> 00:45:48,760
enough return for the risks that you have to bear,

757
00:45:49,320 --> 00:45:52,079
and being able to evaluate that stuff. So people don't

758
00:45:52,159 --> 00:45:56,079
just you know, look at the you know, a spreadsheet

759
00:45:56,280 --> 00:46:00,320
of what the expected what the trailing returns are different

760
00:46:00,320 --> 00:46:03,480
investments and say, okay, well this one had did fifteen

761
00:46:03,519 --> 00:46:06,079
percent last year and this one did eight percent last year,

762
00:46:06,079 --> 00:46:07,440
So I'm going to put all my money in the

763
00:46:07,440 --> 00:46:09,880
fifteen percent one, because that's got to be the best one,

764
00:46:10,679 --> 00:46:15,039
you know. Spoiler alert, that's not necessarily the best one.

765
00:46:15,480 --> 00:46:18,320
Do you plan a third book? I'm all in it over.

766
00:46:18,639 --> 00:46:21,599
We'll see, we'll see how how I recovered from this one.

767
00:46:22,639 --> 00:46:25,079
Speaker 2: Well, that's good. As long as you can there sell

768
00:46:25,119 --> 00:46:27,599
it to sixty percent of the population, that's that's done.

769
00:46:27,599 --> 00:46:28,079
Pretty good.

770
00:46:28,599 --> 00:46:34,480
Speaker 1: There you go, Yes, son, audience is a much bigger.

771
00:46:36,039 --> 00:46:41,599
Speaker 2: Thank you for coming. We appreciate your time. Oh wait, sorry,

772
00:46:41,679 --> 00:46:42,559
there's one last thing.

773
00:46:43,599 --> 00:46:44,480
Speaker 1: You scared me.

774
00:46:44,679 --> 00:46:49,480
Speaker 2: When I first got your your book, I got a

775
00:46:49,519 --> 00:46:55,760
review copy and it said, if you share this review

776
00:46:55,840 --> 00:46:59,639
copy with anybody, you're never going to hit another royal

777
00:46:59,719 --> 00:47:04,840
flush in your life. Now, I'm a video poker player,

778
00:47:04,880 --> 00:47:07,719
and that was that really would hurt me to the

779
00:47:07,719 --> 00:47:10,480
core to have no more royal flushes. So that scared me,

780
00:47:10,519 --> 00:47:12,840
honest on your thing. So I just want to know

781
00:47:12,920 --> 00:47:14,679
that you're scared at least one person.

782
00:47:14,400 --> 00:47:17,800
Speaker 1: With that line. That was special for you.

783
00:47:17,679 --> 00:47:20,280
Speaker 2: Bob Ah very good.

784
00:47:20,320 --> 00:47:21,320
Speaker 1: I do feel special.

785
00:47:21,559 --> 00:47:25,159
Speaker 2: So thank you for being here. Thank you Richard. Go

786
00:47:25,199 --> 00:47:28,199
out and hit lots of royal flushes everybody. Good day.

787
00:47:30,840 --> 00:47:35,719
Speaker 1: Free audio post production Biophonic dot com