Saturday, February 6, 2010
Friday, February 5, 2010
AN INTELLIGENT GAMBLER.
Most people gamble at some point in their lives. For most it provides entertainment, for some it becomes an addiction, while a few become pros and make a living at it. Gambling provides a living for a very small minority and entertainment for the masses, but a casual gambler reaching for a quick buck has the same chance of success as an ice cube on a hot stove.
Some famous investors like betting on horses. They include Peter Lynch, of Magellan Fund fame, and Warren Buffett, who used to publish a newsletter on handicapping. Some card games,such as baccarat, are based on chance alone, whereas others, such as blackjack, involve a degree of skill that attracts intelligent people. Professionals treat gambling as a job. They keep calculating odds and act only when mathematics point in their favor. Losers, on the other hand, itch for the action and enter one game after another,switching between half-baked systems.
When you gamble for entertainment, follow a set of money management rules. The first rule is to limit how much you’ll risk in any given session. On a rare occasion when a friend pulls me into a casino,I put what I am willing to lose that night into my right pocket, and stuff my winnings, if any, into the left one. I stop playing as soon as my right pocket is empty, without ever reaching into the left. Once in a
while I find more money in the left pocket than I had in my right, but I certainly do not count on it.
A friend who is a successful businessman enjoys the glitter of Las Vegas. Several times a year he takes $5,000 in cash and flies there for a weekend. When his bankroll runs out, he goes for a swim in the pool,enjoys a good dinner, and flies back home. He can afford to spend $5,000 on entertainment and never blows more than his initial stake.Lounging at a pool after his cash is gone, he differs from legions of compulsive gamblers who keep charging more chips on their credit cards, waiting for their “luck” to turn. A gambler with no money management is guaranteed to bust out.(Excerpts from "Come into my Trading room"..by Dr.Alexander Elder.)
Some famous investors like betting on horses. They include Peter Lynch, of Magellan Fund fame, and Warren Buffett, who used to publish a newsletter on handicapping. Some card games,such as baccarat, are based on chance alone, whereas others, such as blackjack, involve a degree of skill that attracts intelligent people. Professionals treat gambling as a job. They keep calculating odds and act only when mathematics point in their favor. Losers, on the other hand, itch for the action and enter one game after another,switching between half-baked systems.
When you gamble for entertainment, follow a set of money management rules. The first rule is to limit how much you’ll risk in any given session. On a rare occasion when a friend pulls me into a casino,I put what I am willing to lose that night into my right pocket, and stuff my winnings, if any, into the left one. I stop playing as soon as my right pocket is empty, without ever reaching into the left. Once in a
while I find more money in the left pocket than I had in my right, but I certainly do not count on it.
A friend who is a successful businessman enjoys the glitter of Las Vegas. Several times a year he takes $5,000 in cash and flies there for a weekend. When his bankroll runs out, he goes for a swim in the pool,enjoys a good dinner, and flies back home. He can afford to spend $5,000 on entertainment and never blows more than his initial stake.Lounging at a pool after his cash is gone, he differs from legions of compulsive gamblers who keep charging more chips on their credit cards, waiting for their “luck” to turn. A gambler with no money management is guaranteed to bust out.(Excerpts from "Come into my Trading room"..by Dr.Alexander Elder.)
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