How Productive is the Gambler
In these days where the financial corporations receive full blamed for causing the financial crisis, it may be an idea to look at the gambler (for keyword density's sake, let's call the gambler Mr.G). Did Mr. G. have a role in all this?
Gamblers and gambling in the news:
The motivation of Mr. G. is sourced by excitement that is fostered by the perspective of a short term gain which can be achieved with only a limited investment.
What makes Mr. G. a real Mr. G. is that he is affected by some "irrational beliefs" like the "Illusion of control" and a belief (popularly rephrased) that his chances will be evened after an initial loss, known as the gambler's fallacy.
Mr. G. can operate in different environments, like that of a casino and that of a stock-exchange.
Now for the financial crisis one could ask whether there is a Mr. G. in each of us? Are we also biased by irrational beliefs? Why did so many people trust a guaranteed return of 10% (like Madoff offered)?
Differences between a Mr. G. and the trader:
- the (professional) trader is someone who is guided by a very rationalized system and acts in a disciplined way. The gambler's drive is much more emotional and his organization less structured, more chaotic. The less professional trader however behaves like a Mr. G. "hoping" that his odds will change over time.
Differences between a Mr. G. and the speculator:
- probably none: the gambler and the speculator are the same professionals only their domain (investment, finance versus gaming) differs and (sometimes) the amount involved in the game.
Differences between a Mr. G. and the investor:
- the investor has a long term focus and adjusts his "bet" on this focus. The gambler is to satisfy a short-term thrill, and any systematic approach will take the gambler out of its profession.
Gamblers and gambling in the news:
- The Chicago Tribune reports of a casino that wasn't obligated to protect a problem gambler who lost $125,000 in a single night, so the Indiana Court of Appeals ruled.
- Nevada authorities are on the hunt for a Toronto gambler who allegedly wrote $12.9 million in bad cheques to two Las Vegas casinos (The Gazette, Montreal).
- CROWN Casino has won access to the financial records of chronic gambler Harry Kakavas, to put his declared $36 million losses "in context".
The motivation of Mr. G. is sourced by excitement that is fostered by the perspective of a short term gain which can be achieved with only a limited investment.
What makes Mr. G. a real Mr. G. is that he is affected by some "irrational beliefs" like the "Illusion of control" and a belief (popularly rephrased) that his chances will be evened after an initial loss, known as the gambler's fallacy.
Mr. G. can operate in different environments, like that of a casino and that of a stock-exchange.
Now for the financial crisis one could ask whether there is a Mr. G. in each of us? Are we also biased by irrational beliefs? Why did so many people trust a guaranteed return of 10% (like Madoff offered)?
Differences between a Mr. G. and the trader:
- the (professional) trader is someone who is guided by a very rationalized system and acts in a disciplined way. The gambler's drive is much more emotional and his organization less structured, more chaotic. The less professional trader however behaves like a Mr. G. "hoping" that his odds will change over time.
Differences between a Mr. G. and the speculator:
- probably none: the gambler and the speculator are the same professionals only their domain (investment, finance versus gaming) differs and (sometimes) the amount involved in the game.
Differences between a Mr. G. and the investor:
- the investor has a long term focus and adjusts his "bet" on this focus. The gambler is to satisfy a short-term thrill, and any systematic approach will take the gambler out of its profession.
Written by admin
0 comments: