by Vedran Vuk, Casey Research:
While investing in the market is a little like gambling in a casino, when we invest part of our hard-earned nest egg, we want to tilt the odds in our favor before placing any bets.
At one time in my life, I was a student of the game of craps. When I placed a bet on the pass line, I could tell you the exact statistical probability of winning or losing on each roll of the dice. Of course, the odds of every game in the casino favor the house – otherwise there wouldn’t be a house. Gamblers consider themselves lucky when they can hold positions called “true odds” – which is basically 50/50 – and that happens very rarely.
Craps – like a stock portfolio – allows you to hold several positions at the same time and can quickly get complicated. Each shooter ends the game on a roll of the dice, with the casino potentially hauling in all the money on the table.
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