Jim Grant is an award-winning author and the founder/editor of a highly respected publication that is “an independent, value-oriented and contrary-minded journal of the financial markets”. Grant has seen many market cycles during his four decades in finance so it is worth looking at the most important lessons he has learned in that time and consider how they apply to betting.
Here is our sports betting perspective on Jim Grant’s top tips:
1. The key to successful investing is having everyone agree with you — LATER. The most popular investment of the day is rarely the best investment.
Popular teams are often poor value just through weight of money. This means that bettors seeking value often require the courage to be a contrarian. It’s not as simple as ‘fading the public’ to win, but you will be making many ‘unpopular’ bets including ugly underdogs. Serious bettors don’t bet teams, they bet numbers.
2. You aren’t good with money. Because humans aren’t good with money. We buy high and sell low because it’s what comes naturally. It’s difficult to control emotions. It’s more difficult when money is involved.
Many bettors follow the market moves, but at the bottom of the market. Getting on at -6 simply because a team has moved all the way from -3 is not a smart play. The value that was the instigator for the line move is almost certainly gone.
Taking the emotion out of betting is easier said than done. But a dedicated betting bank and long-term mindset is essential.
3. Everything about investing is cyclical… prices, valuations, enthusiasms. And this will never end.
Everything about betting is cyclical as well. Both winning and losing runs are inevitable and that is why bankroll management is so crucial. You can have a long-term winning edge yet still go bust because you bet too high a percentage of your bankroll on each play.
Identifying an edge on the market is crucial, but all edges disappear over time. That’s why the smartest operators are constantly evolving their approach.
4. You can’t predict the future. Nor can the guy who claims he can. You can, however, see how the crowd is handicapping the future. And by observing the odds, you can try and find the best value.
Successful betting is about assigning probabilities to the likelihood of any event happening such as a team winning a game and then betting when the odds represent value.
The coin toss is the most easy to understand example away from sport. We don’t know whether it will land Heads or Tails, but what is certain is that if we keep taking -110 we are guaranteed to lose long-term.
5. Every good idea gets driven into the ground like a tomato stake.
Innovators and early adopters can find edges, but over time they are gradually priced into the market. Value becomes much harder to find.
6. Markets are not perfectly efficient. Because the people who operate them aren’t perfectly reasonable. The debate over efficient markets has raged since the birth of public markets. Grant’s comes down on the side of inefficiencies—of lucrative inefficiencies.
If betting markets were so perfectly efficient, how do professional bettors and large betting syndicates survive? How do the team at Sports Predictor have long-term winning records?
There’s still value to be found across a range of sports betting markets. It’s just that it becomes a little bit harder each year, which makes the betting industry a survival of the fittest.
7. Patience is the highest yielding asset. Charlie Munger, Warren Buffett’s longtime partner in Berkshire Hathaway, explained the importance of patience this way:
“How did Berkshire’s track record happen? If you were an observer, you’d see that Warren [Buffett] did most of it sitting on his ass and reading. If you want to be an outlier in achievement, just sit on your ass and read most of your life.”
Successful people are lifelong learners. None of them claim to have cracked the code or created a golden goose. Instead they’re always looking to refine their approach. Their inspiration to do so can come from many different sources inside and outside of the betting industry.
8. Leverage is like chocolate cake. Just a little bit, please. Markets will always correct.
And so will the betting gods. ‘Reversion to the mean’ is inevitable so don’t let it surprise you. You’ll never know exactly when negative variance will hit, but rest assured it is heading your way.
9. “Don’t overestimate the courage you will have if things go against you. Consider all the facts – meditate on them. Don’t let what you want to happen influence your judgement. Do your own thinking. Don’t let your emotions enter into it. Keep out of any environment that may affect your acting on your own reason.”
Those quotes were borrowed by Jim from the late Bernard M. Baruch who was renowned as one of the greatest investors who ever lived. Their relevance as sports betting insights is widespread:
More information on Jim Grant can be found at Grants Interest Rate Observer.