# Proposition Bets, Markets, and Suckers, from Jeff Watson

April 26, 2008 |

When I was a kid, I was always looking for an easy way to make money. My dad used to point out laborers working in the hot sun, explaining that "Those guys were the ones who didn't care about their grades." As always, my dad was 100% correct, and I didn't want to end up like that, preferring to make money in an easier manner.

Since I liked to play games as a kid, I tried to get as good as I could at whatever game I could master, then play it for cash. I found limited success, but after awhile, my friends avoided playing against me like the plague. During high school, I used to spend a lot of time playing poker in various places that would be considered to be shady, but those games were out of the orbit of my friends and presented opportunities to make money. I played a pretty tight- mechanical game those days, and observed the sharp type of guys, and how they operated. It was in those games, from those guys, that I discovered the beauty of proposition bets. A proposition bet is one of those "I'll bet you that….." followed by what would seem to be an impossible outcome, and a guaranteed win for anyone who would take the bet. Of course, the person taking the bet would be opening his wallet right after he lost. I watched those guys making different prop bets, then filed them away for further use. Since I was rather studious, I went down to the library and found volumes upon volumes of ideas for proposition bets. By the time I was in college, I had a repertoire of at least a thousand different bets, plus variations on each of those bets. I had so many bets tucked away in my brain, and also in my journal, that I could come up with a bet in almost any situation. My immediate friends stopped betting with me after awhile, and I had to find places where greedy people congregated, such as the track, poker games, bars, and the exchange. People would take my silly bets and be surprised that I could really tie a cigarette in a knot without breaking it. They would be amazed that Jackie Robinson wasn't the first black baseball player in the majors, and they would literally fall flat on their face when they found out that George Washington wasn't the first president of the US. The best people to pitch the proposition bets to were the greedy, gamblers, sportsmen, and speculators, as they would think they had an edge when in reality they had no edge at all. Gamblers were great, as I devised little card games that looked like a certain loss for me, when I really had a 4% edge. I'd play those card games with a freeze out condition, guaranteeing my 4% grind. If I lost on those games, I paid with a smile. Some of my little card games like "Face-up poker" offered me a 100% edge. Sportsmen were great, especially when they found out that I could tee off with a driver, and make that golf ball go a mile on a flat surface(OK, I did that one the day the lake froze over with sheet ice which happens to have the lowest coefficient of friction in nature). Speculators took my bets with glee, as they didn't think I could really throw a pumpkin across the trading floor…after market hours, of course. I made a lot of money off of those bets over the years, and the people I considered to be suckers were paying my bills I would allow myself to be the victim of a prop bet (after getting the price as low as I could), and would use that bet later and eventually make a profit.

The market offers a thousand prop bets a day, with millions of suckers waiting to be fleeced. A few months ago, a fraternity brother of mine who's a broker called me offering me a great investment priced at 98. I hit the offer, and later in the day saw the great investment (I won't say what it was, it was so bad), offered at 90. Even though I was angry, a little voice in my head told me that I shouldn't have whacked him so hard in college betting him that he couldn't fold a sheet of newspaper in half 11 times in a row. I made 20 bucks on that silly bet in college, and lost a thousand times more on that slam dunk investment. I guess that suckers come in all shapes, sizes, and colors and that at one time or another, we're all suckers.

Nowadays, I don't do prop bets, but will bring them out at a party and show them for free. People will be amazed at my cleverness, and be mildly entertained. I do see that gleam in some eyes that tell me that someone's going to get fooled or taken for a lot of cash the next day.

As far as winning money. There is a great line from the movie Rounders. Matt Damon quotes Canada Bill Jones one of the great characters in the world of gambling. "Some people think it a crime to take money from people, I consider it a crime not to."

Some other famous quotes from Bill Jones were:

"A fool and his money should have never gotten together in the first place."

"A Smith and Wesson beats four of a kind."

There also is the old story of Canada Bill playing in a crooked faro game in New Orleans. It was in the back room of a barbershop. One of his associates, George Devol found him there and saw immediately that the dealer was cheating using a "two-card" (rigged) box. He begged Bill to quit the game. "Can't you see this game is crooked?" Devol asked. "Sure I know it, George," sighed Bill with resignation, "but it's the only game in town."

Let me say this about poker. Nobody and I mean nobody ever helped me learn anything about how to play the game. Everything I learned I paid for. I remember a line that an oldtimer used on me that resonates to this day. I was in a pot against the wizened and very seasoned veteran and I put in a healthy raise prior to the last card to come out. After a bit of hesitation my opponent made the call. The last card came and I bet he raised and I called. He turned over the winners. I knew he beat me on the last card. I responded with "How in the world did you make that call with the last card coming?" He looked at me and said "you paid to see my cards, lessons cost extra."

From that moment on, I learned that if I was ever going to get any better it was up to me and nobody was going to give me a get out of jail card free.

After 30 years of buying and selling stocks I have learned one inviolable lesson that the same rule holds true today as it did so many years ago. "Either learn how to play the game or bring more money."

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