Mutual funds versus
blackjack
24 March 2000
By Mark Pilarski
Dear Mark,
I've always felt that being in the stock market
is the same as playing blackjack. They're both
gambling. I might as well do something I love
instead of giving some investment company my
money to flush down the toilet. You're in
gambling, do you agree? Ralph G.
Your analysis of comparing the stock market to
blackjack is way off the mark. Entering the
world of blackjack as a profession (investment)
takes enormous work and you're playing against,
if not for a better term, a financial
institution that not only has a built-in house
edge but is there exclusively to beat you. Come
on, Ralph. How many people do you know who win
at blackjack-consistently? Compare that to what
a market like NASDAQ has done over the past 10
years. Gone up, up, up! Give me a dart board and
the Wall Street Journal and I would have
averaged 12% over the past 30 years.
I'm sure your next argument will be that of
becoming a sophisticated card counter. Sorry,
it's not worth spending hours in smoke-filled
casinos, performing tedious mental calculations
and disguising your play so you won't be thrown
out-just for a one percent edge.
Finally, Dr. Edward Thorp, who wrote the classic
Beat the Dealer was, as a professional, in the
investment business. Even he conceded it is far
easier to make money in the financial markets
than at blackjack. Unfortunately, gambling is a
poor man's way of investing, and even for the
poorest of investors, a $500 wager in a mutual
fund is a much better bet.
Dear Mark,
When the state lotto gets over $20 million here
in California, my mother wants me to buy $10
worth of lottery tickets and then mail them back
to her in Michigan. Is it legal for me to mail
her the tickets? Roberta G.
Congratulate your mother for me, Roberta, for
waiting till the lottery reaches $20 million
before she purchases her tickets. Because the
true odds of hitting the California lottery are
18,009,460 to 1, she's actually playing the game
smart.
As for the legality of sending tickets through
the mail, sorry, Roberta, using the United
States Postal Service for this particular ruse
is against the law. Millions do it, unknowingly,
but I have yet to hear of one individual who has
been charged, or convicted for sending lottery
tickets by mail; NOT ONE! But if you want to
play it straight, it's perfectly legal to use a
service like Federal Express or Airborne
Express.
Where individuals and businesses have gotten
into trouble is soliciting you to play a foreign
lottery. Ever get one of those plain white
envelopes enticing you to play the Canadian
Lottery, Roberta? Don't! It's against the law,
again for the same reason. U.S. Postal
regulations state that using the U.S. mail to
solicit people to play the lottery, or even to
distribute any type of lottery material, is
strictly illegal.
By the way, there's a reason why their envelope
on the outside doesn't give away what's on the
inside. With a Canadian Lotto return address, it
would be confiscated by the USPS before it
reached you.
Dear Mark,
On a recent trip to Branson, Missouri, I stopped
along the way in Kansas City and gambled for the
first time. I was surprised to see both loss
limits and two-hour cruises. Is that common?
Bill K.
The loss limits and cruise times are in place to
prevent problem gamblers from spending more than
they can afford to lose. Currently Missouri is
the only state with these restrictions. It is
the wisdom of the Missouri legislature that by
setting limits you won't blow your trip
bankroll, you will have time to get religion and
still have enough money to see Wayne Newton in
Branson.
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