This revolutionary new strategy involves spreading risk around.
For example, YJ tells me that the odds for Germany topping their world cup group started at around 1.47, means for every $10 you put in, you get $4.70 in profit if you win.
Now the odds are at 1.10, so you only profit by a dollar if you bet $10 now.
Assuming I foresaw that the odds for Germany to be group winner would drop, I would bet when the odds open at 1.47.
Seeing now that the odds at Singapore Pools are at 1.10, I would hang around a Singapore Pools outlet and offer to sell my ticket to smart punters for $12. The total sum of money the ticket earns if Germany is the group winner is $14.70, and $14.70/$12 is 1.225, thus I am still offering better odds than Singapore Pools at this time.
I would only earn $2 instead of $4.70 if i do the above, but I don't have to wait to see if Germany is group winner. $2 in hand is better than $4 in Singapore Pools. Ok so this is a bad example because Germany is going to be group winner, but you get the idea.
This strategy means that you don't have to guess if the vuvuzela sound waves will propel the Jabulani world cup ball into the net. You just have to figure out which bets are the more popular ones. Damn this is totally a lesson in quantitative finance.
Showing posts with label economics. Show all posts
Showing posts with label economics. Show all posts
Wednesday, June 16, 2010
Sunday, March 15, 2009
Freakonomics
Freakonomics is a book about statistics, and the most interesting deduction it made that stayed in my mind was that lower crime rates were due to the enactment of the right to abort some time back, and the author makes use of statistics to prove that point. He links seemingly non-related stuff to prove that they actually might have causal effects on each other. So i found that case interesting, but it's a pity the rest of the book was such a snore. Freakonomiczzz.
So if i extrapolate that concept, here goes, let's say you're a guy, you're in a public toilet and there's a queue for the urinals. Whether there's a queue or not would seem to have no effect on the amount of time each guy takes. But if you actually stood there and recorded down the time taken, it would probably be faster when there's a queue. Cos who would relish the feeling of someone breathing down their necks while their private parts are public parts? Perhaps with the exception of gays, and even then, very perverted gays. So the emphasis would be to be done as quickly as possible without wetting the pants.
I'm not really sure what relevance the previous paragraph had, but if you've read it, thanks for your patience. Crap aside, we've come to the gist of this post, which is that i've thought of a new economic indicator. There's always doubt as to when the economy is really recovering and when we should invest in stocks, and this is where my indicator is a reliable gauge. You simply have to count the number of people who buy Toto and 4D everyday. The greater the number of people, the worse the recession. Don't believe me? See for yourself, it's a recession now, and you don't see the crowds at singaporepools thinning. In fact, hope springs eternal, so the more desperate the people, the more Toto and 4D they buy. Probability of striking Toto when you buy one combination is 1 out of 8145060 and 1 out of 10000 for 4D for your information. You'd have to be pretty lucky to strike Toto, less so for 4D. Or you could try your luck in another way. Wait for the 10million jackpot, buy all 8145060 combinations, and hope that no one strikes too. Though going by history, that is quite impossible. Somehow, human nature has it that the more desperate the person, the more he will resort to things with low probability of success (getting away with robbing a bank, buying big sweep) Back to the economic indicator, you can plot a graph using the data that you have amassed standing outside singapore pools outlets, preferably with graphmatica, free software for schoolkids. The number of people placing bets is expected to increase with the deterioration of the economy, so when the human traffic falls, be ready to buy some stocks because a market recovery is just around the corner. But as they say, trading is a hard way to make an easy buck.
So if i extrapolate that concept, here goes, let's say you're a guy, you're in a public toilet and there's a queue for the urinals. Whether there's a queue or not would seem to have no effect on the amount of time each guy takes. But if you actually stood there and recorded down the time taken, it would probably be faster when there's a queue. Cos who would relish the feeling of someone breathing down their necks while their private parts are public parts? Perhaps with the exception of gays, and even then, very perverted gays. So the emphasis would be to be done as quickly as possible without wetting the pants.
I'm not really sure what relevance the previous paragraph had, but if you've read it, thanks for your patience. Crap aside, we've come to the gist of this post, which is that i've thought of a new economic indicator. There's always doubt as to when the economy is really recovering and when we should invest in stocks, and this is where my indicator is a reliable gauge. You simply have to count the number of people who buy Toto and 4D everyday. The greater the number of people, the worse the recession. Don't believe me? See for yourself, it's a recession now, and you don't see the crowds at singaporepools thinning. In fact, hope springs eternal, so the more desperate the people, the more Toto and 4D they buy. Probability of striking Toto when you buy one combination is 1 out of 8145060 and 1 out of 10000 for 4D for your information. You'd have to be pretty lucky to strike Toto, less so for 4D. Or you could try your luck in another way. Wait for the 10million jackpot, buy all 8145060 combinations, and hope that no one strikes too. Though going by history, that is quite impossible. Somehow, human nature has it that the more desperate the person, the more he will resort to things with low probability of success (getting away with robbing a bank, buying big sweep) Back to the economic indicator, you can plot a graph using the data that you have amassed standing outside singapore pools outlets, preferably with graphmatica, free software for schoolkids. The number of people placing bets is expected to increase with the deterioration of the economy, so when the human traffic falls, be ready to buy some stocks because a market recovery is just around the corner. But as they say, trading is a hard way to make an easy buck.
Sunday, February 01, 2009
yl explains leverage
Nowadays with the financial crisis in full swing, talking about finance very in. Newspaper, newsweek all saying the same things. Like why part A of the economy sucks, why part B of the economy sucks, that's why everybody suck thumb. That is now la. Not so long ago, i read this column by a financial expert in newsweek say the drop in stock prices is just a 'short-term correction', cheemology for singing "if we hold on together, I know our dreams(of getting rich) will never die". Now become 'if we hold on to the stocks together, all of us will die together'. There's so many explanations for why the whole financial crisis happen, but i think those reporters just pangsai out something to make a living la, regardless of whether they actually know what's happening or not, unlike me cannot make any money writing. Actually, whether you understand the financial crisis or not also doesn't matter, because you also cannot do anything about it. Even the people who are doing something about it also don't understand it, so no point, end up just fight. But i just want to explain what is leverage for fun.
Leverage is simply borrowing, like how companies on Wall Street borrow to make money (and now lose money). But let me illustrate this with an example everyone can relate to, at the same time teach you all some survival skills.
Let's say you got no money. But you're hungry, so you go to Macdonald's. You look around, and you spy someone who has just bought an extra value meal. You think, where does that extra value go to? Must be for me la. So you approach that someone, and ask in your most charming way, can I have a few pieces of your fries? Smitten, the person says yes, albeit reluctantly. With that legitimate piece of consent, you turn into a food monster and grab half of the fries, and put it on another tray which you have koped earlier on. But you're not done yet. You also grab the fries container from the shocked someone's tray. Finally done with the food rape, you remember what your mama told you and say 'thank you'. (I believe investment bankers are polite people too) Now the proud owner of half a packet of fries, is it time to enjoy the fruits of someone else's labour? Not so fast. You have to be hungrier than that! Instead, you don't touch the half packet of fries and you head towards the cashier with it. You say in a polite voice, "Excuse me, I think the fries are overcooked." You eyeball the cashier and maintain a solemn face as he gives you his WTF expression. If you sense resistance, or some tension, you go for the jugular and say, "Yes, it's overcooked, would you like to try some of it?" At this point, in all probability, the cashier will give in and give you a whole new packet of freshly-ccoked fries. It's not his store after all. He's just a poor cashier forced to deal with hungry psychotic people. He'll give anything to make them go away. Now what you do next really depends on your level of greed. You could eat your fries, though thats too easy for you. Or you could divide your fries, kope another fries container from the dustbin or someone else and repeat the steps, thereby getting you 2 packets of freshly-cooked fries. And the process could go on. Then you can sell macdonald's french fries outside macdonald's for half the price! Or you can graduate to leveraging burgers instead of/and fries. Man the possibilities are endless!
(Based on a true story)
Leverage is simply borrowing, like how companies on Wall Street borrow to make money (and now lose money). But let me illustrate this with an example everyone can relate to, at the same time teach you all some survival skills.
Let's say you got no money. But you're hungry, so you go to Macdonald's. You look around, and you spy someone who has just bought an extra value meal. You think, where does that extra value go to? Must be for me la. So you approach that someone, and ask in your most charming way, can I have a few pieces of your fries? Smitten, the person says yes, albeit reluctantly. With that legitimate piece of consent, you turn into a food monster and grab half of the fries, and put it on another tray which you have koped earlier on. But you're not done yet. You also grab the fries container from the shocked someone's tray. Finally done with the food rape, you remember what your mama told you and say 'thank you'. (I believe investment bankers are polite people too) Now the proud owner of half a packet of fries, is it time to enjoy the fruits of someone else's labour? Not so fast. You have to be hungrier than that! Instead, you don't touch the half packet of fries and you head towards the cashier with it. You say in a polite voice, "Excuse me, I think the fries are overcooked." You eyeball the cashier and maintain a solemn face as he gives you his WTF expression. If you sense resistance, or some tension, you go for the jugular and say, "Yes, it's overcooked, would you like to try some of it?" At this point, in all probability, the cashier will give in and give you a whole new packet of freshly-ccoked fries. It's not his store after all. He's just a poor cashier forced to deal with hungry psychotic people. He'll give anything to make them go away. Now what you do next really depends on your level of greed. You could eat your fries, though thats too easy for you. Or you could divide your fries, kope another fries container from the dustbin or someone else and repeat the steps, thereby getting you 2 packets of freshly-cooked fries. And the process could go on. Then you can sell macdonald's french fries outside macdonald's for half the price! Or you can graduate to leveraging burgers instead of/and fries. Man the possibilities are endless!
(Based on a true story)
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