Don’t Bet on the Broncos (or Anyone Else)
There’s an old joke about two backpackers who run into a pissed-off bear. They take off running, and the first turns to the second and says, “Oh my god! We can’t outrun this bear.” The second replies, “Who cares? I just need to outrun you.” Betting is a lot like that. You don’t necessarily need to be right, you just need to be more right than the schnooks.
Logic suggests that the ideal time to bet is the Super Bowl, the only time that the smart money is overwhelmed by the schnooks. As the NYT writes, the Super Bowl brings the schnooks just flooding in. On the other hand…that’s what all the schnooks win. If you are a lifelong gambler looking for one big game where you can get an edge, you should be jazzed about betting on this Super Bowl. Two big names with huge fan bases and a ton of hype? It’s schnook paradise. On the other hand, if you don’t bet every single week, you are the dumb money. To rephrase, if you don’t know the sucker at the poker table is, you’re the sucker.
The sad thing is how selectively people understand this logic. What’s true of the Super Bowl is true all year long. When an individual decides to invest in the stock market, he isn’t playing in some sort of kiddie pool. He is participating in zero-sum trades against the smartest, most highly-trained, and experienced traders in America. He isn’t some visionary bringing a fresh and valuable perspective the pros have missed. He’s the schnook placing a bet on the Broncos to beat the spread by 25.
And so, children, you should invest using low-cost index funds, not pick individual stocks, and not attempt to time the market.
Because Super Bowl.