Betting is a lot like investing because it requires extensive research, an ongoing search for value and an understanding of psychology, discipline, math and money management.
So the 16 rules of legendary investor and mutual fund manager Sir John Templeton are fascinating. Here are a few of them adapted for bettors:
Return on Investment is undoubtedly important but it is only a percentage measure. The most critical benchmark to judge your success is simply how many more dollars you have at the end of any given period. Bankroll growth is the ultimate goal.
This means that a higher volume, lower margin approach may add more dollars to your betting bank compared to a method that has a higher ROI percentage but a lower number of plays. Anyone hitting at 60% long-term is arguably leaving money on the table. If they had a subset of plays hitting at 55% that is still a very profitable mark.
If you drop or significantly modify a proven approach after just a short losing run you are destined to lose. The reason that you have a clear and separate betting bankroll is so that you can ride out the inevitable losing run.
Every bettor/predictive model/handicapping approach will go through a significant drawdown of their bank so it’s essential that you can live ‘off peak’. Prepare yourself to spend most of your betting life at a level that is less than the highest point that your bank has ever reached. Once you’ve accepted that betting psychology as a mindset you’ll be far better equipped to cope with losing periods.
The words of Wall Street legend Lucien Hooper should be considered from the perspective of a sports bettor: “What always impresses me,” he wrote, “is how much better the relaxed, long-term owners of stock do with their portfolios than the traders do with their switching of inventory. The relaxed investor is usually better informed and more understanding of essential values; he is more patient and less emotional”.
There isn’t just one single pathway to sports betting success. Some professionals have just a handful of bets per week and others have several hundred. Find out what suits your own style and stick to it.
Overhyped players, coaches and teams come and go on a regular basis so you need to be prepared to bet on the bubble to burst when the opportunity presents. That is easier said than done because it is very easy to get swept away by the hype, but if you are serious about winning then your job is to find value.
By definition, the value in betting is away from popular opinion. The simple equation we have discussed previously is that betting profits are the difference between perception and reality. Between what the market expects to happen and what actually happens.
Human nature makes it quite difficult to go against the crowd but you will need the mental fortitude to oppose popular opinion. When so many so called ‘experts’ are touting a particular play it takes quite a lot of strength to directly oppose the market. But you can reassure yourself that when so many bettors are all backing the same team, the value (if there was any initially) has already gone. Forget chasing line moves after they’ve already happened – that horse has already bolted.
Think of the market as the means to buy (ie. bet on) undervalued teams. In simple terms you should understand that you have two choices: you can either be a contrarian or a loser. That’s easy to say, but difficult to do unless you are 100% committed.
‘Investigate before you invest’ applies to betting as well. Remember that there are some very smart operators who you are effectively competing with every time you place a wager.
There are no professional sports bettors or betting syndicates that operate on auto-pilot and just watch the cash pour in. All work exceptionally hard and are not ignorant or complacent enough to believe they have perfected their approach. They recognize that improvement is always possible and that it’s a changing game that we’re playing in. What worked last year won’t necessarily be as successful this year because all edges degrade over time.
So make sure you have done enough work (or engaged the services of someone to do the hard yards for you) to enable you to bet with an edge. Don’t guess or rely on good luck.
1. Invest for maximum total real return
2. Invest — Don’t trade or speculate
3. Remain flexible and open minded about types of investment
4. Buy Low
5. When buying stocks, search for bargains among quality stocks.
6. Buy value, not market trends or the economic outlook
7. Diversify. In stocks and bonds, as in much else, there is safety in numbers
8. Do your homework or hire wise experts to help you
9. Aggressively monitor your investments
10. Don’t Panic
11. Learn from your mistakes
12. Begin with a Prayer
13. Outperforming the market is a difficult task
14. An investor who has all the answers doesn’t even understand all the questions
15. There’s no free lunch
16. Do not be fearful or negative too often