The Wall Street Journal article earlier this month on sports handicapper, Bob Stoll (The Man Who Shook Up Vegas), has already become a meme, but I want to revisit it and draw a few parallels with other writings on speculation …

From the WSJ article:

Although he makes a living handicapping college and pro football and basketball, Mr. Stoll rarely visits Las Vegas. He's never placed a bet in one of the city's sports books and hasn't attended an NFL game since he was 9. He does not make a habit of watching sports on TV. "Your eyes can only fool you," he says.

From Michael Lewis' "Moneyball" (referencing Oakland A's GM Billy Beane):

Billy hadn't the slightest intention of watching his team make history. It was just another game, he said, and he didn't watch games. "All they provide me with is subjective emotion," he said, "and that can be counterproductive."

From the WSJ article:

Put him in a different setting and he might be running a hedge fund, developing office towers or monitoring the currency markets.

From "Moneyball" (referencing then-A's assistant GM Paul DePodesta):

He was just the sort of person who might have made an easy fortune in finance, but the market for baseball players, in Paul's views, was far more interesting than anything Wall Street offered.

From the WSJ article:

But in 2005, Mr. Stoll noticed that a few minutes after he sent his advice, the lines on those games would shift slightly … While the line moves were flattering at first, they quickly became a problem … The bookmakers had clearly subscribed, he says, and were trying to change the lines before his clients could make bets … The more the point spreads move, the less effective his advice becomes. And when the bookmakers figure him out, his disciples will drift away.

From Education of a Speculator:

These oh-so-fleeting hot hands of market gurus become clarified. An advisor comes up with a successful prediction. For example, Bob Prechter, Elaine Garzarelli, and Mario Gabelli picked the big crash in October 1987. They become prophets. Their followers were flush, and they told their friends about their newfound gurus. But then their fills from following the recommendations of the gurus became a lot worse because they were taking their following with them.

From the WSJ article:

If there's one bedrock law of sports gambling, it's that the people taking bets, the bookmakers, always win. Some of this is due to the haplessness of average bettors, or "squares," who never fail to make dumb wagers. The rest is a matter of design. By taking commissions on bets and using oddsmaking tools like point spreads and bet limits, the world's bookies have engineered the system to their favor.

From "Education of a Speculator":

No one doubts that the public must lose at the races in order to pay for the prize money, stable care, employees, and upkeep of the land, building, and equipment … If they bet like other members of the public, they know they'll lose … Bookie often told me that he had the best job in the world. He was guaranteed a profit on every transaction … If only public speculators would pay as much attention to -what Mark Cramer, my favorite horse racing author, calls - the "gravitational pull of the house take," as horse betters do, the public would have lots more chips.

From the WSJ article:

It's a story Mr. Stoll says he's heard thousands of times from clients who don't look at the long term. Even good bets lose 40% of the time, he says, but some clients don't grasp that. "They think I'm either hot or I'm cold."

From your column on "hot hands":

Most researchers who have studied hot hands conclude the concept is a myth … Yes, a 3-for-3 shooter or batter feels that he has a better chance of hitting the next time up. Yes, when stocks go up three weeks in a row, everyone's bullish, and when they go down three weeks in a row, everyone is bearish. The problem is that card players and dice players feel this, too. After filling in a few flushes, you are "in the zone."

The WSJ article also offers a discussion of the statistical bent of Bob Stoll's approach as well as the immense amount of research necessary to develop an edge.

And in a CNBC interview last Friday, Bob Stoll made some interesting comments that suggested how sentiment distorts betting odds:

When a team is looking as bad as they can possibly look in recent weeks that's probably the time to bet on them actually. The harder a game is to bet the better bet it is usually.





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