The truth about money management

[CharlieMaxwell]

Losing gamblers love to blame poor money management for their bankroll deficiencies. However, this is typically just a crutch losing sports bettors use to explain their losses.

Read the rest of Fezzik's latest column by going to the RX home page at www.therx.com

Charlie

 

[casinghand]

I seriously doubt that poor money management is used as a crutch by the masses of losers.

Poor money management can overcome good handicapping.

Good handicapping cannot overcome poor money management.

This is undeniable.

 

[wilheim]

Personnaly a straight win percentage is inaccurate (for me), why, because I use different unit bets. For example I might bet 2 units on one game and 1 on another, then 1.5 units and then 1 unit on two later games the same day. Say I win 2 and lose 2, that really doesn't tell the whole story about my day. Spread it out through an entire season, and win percentage becomes secondary to units won (or lost).

wil.

 

[oldmanTED]

While generally agreeing with the tone of this article, there are a couple of specifics where I believe Fezzik to be off base.

First, it is generally understood in this industry that less then approximately 5% of gamblers show a long term profit, which equates to 1 out of every 20. No doubt those that are capable of being part of that 5% possess both the skill to handicap as well as the skill to money manage. If only 1 out of every 20 were able to pick 52.4% winners, the percentage of those that succeed in this business would be much less then 5%.

Second, and more important, is Fezzik's last statements indicating that by hitting 55%, even the "undisciplined, self-motivated bettor" would show a profit and "show me a 55% bettor with any money management skills, and I'll show you a long term winner at the game".

These statements couldn't be further from the truth. While 55% is more than sufficient to turn a nice solid profit, being "undisciplined" or having "any" money management skill will not lead to becoming successful in this business. In my many years, I have known many a solid handicapper that has shown a consistent winning percentage between 55%-60% on a yearly basis, but was either undisciplined or lacked "any" money management skill and, to a man, were busted and no longer in this business.

While I agree that one must hit a consistent winning percentage above 53%, it in no way guarantees a "long term winner". Some may use poor money management as an excuse for losing, but without it, one has no chance to win, particularly those that are "undisciplined".

 

[THE SHRINK]

"I have known many a solid handicapper that has shown a consistent winning percentage between 55%-60% on a yearly basis..."

OH REALLY???

Do you realize how DIFFICULT that is to achieve on a YEARLY basis???


I love the rest of your points though...

Well taken...

THE SHRINK

 

[coolbreeze]

Wouldn't it be nice if you could get -105 instead of -110

 

[picasso]

I would tend to agree with Fezzik's article. Blaming poor money management is way overused. I believe it's an ego thing. It's a blow to the typical sports junkie's ego to have all this sports knowledge yet not be able to beat the system. So, rather than accepting reality, he looks for the softer 'blow' and blames money management (seems to be a trendy excuse) amongst other things.

Of course, the excuses don't stop there. "It was fixed...". "Bad beats always go against me...". "Overpaid athletes don't care...". If it's a college game, "What was I thinking betting on 18 year olds...". "The refs were on the take...". We see these excuses regularly.

Sports betting is certainly difficult to beat over the long haul, but it goes far beyond money management. Obviously, one needs to do their homework. If it's simply a hobby and not worth putting in the effort, so be it -- chalk it up to entertainment expense. Nothing wrong with that. But if one is serious about beating the system, it's a full-time job. It's more than just watching SportsCenter, reading a few trends, betting against a team "cuz they suck", etc. Are you getting as much information as possible? Do you research local newspapers and college sites for info not reported nationally? Do you watch as many games as possible? Do you do your homework on games before lines are posted so as to get the good early numbers when warranted? Win or lose, if you weren't able to view a game, do you check the box score and recap to assess whether you were on the right/wrong side? Taking advantage of scalps and +EV middles? Taking advantage of 2nd half lines that oddsmakers are forced to hurriedly post (and I'm not talking about obvious errors that fall into the void category)?

IMO, some of the reasons that are much more a detriment in the long run than money management (beyond the obvious difficulty level):

1. Betting for action. Without the proper research, we're talking coin toss here.

2. Betting a game because it's on TV. Similar to #1.

3. Too few outs. Those half point losses sure do add up. And no, I'm definitely not suggesting buying points.

4. Not taking advantage of reduced juice. There are quite a few reputable reduced juice books out there. How can one not take advantage of it? Makes a big difference in the long run. This isn't to say that full juice books don't offer value at times. If you haven't been tossed from SIA yet, you know what I mean (winnings of 15k are their approximate threshold for banishment). But there are also books like WSEX and Intertops whose customer bases are predominantly the 'recreational' type and thus, they frequently offer dog-friendly lines.

5. Chasing losses. This could possibly tie into money management issues depending on how one goes about it. But even if one uses the same (or appropriate) unit size, we're probably talking about the standard no-research coin toss type bet. And then there are the late-night bailout parlays, not to mention the all-or-nothing get-even bailouts on Hawaii late-night home games. There's always tomorrow...

6. Buying points. I can't believe how often I see this. Sure, there might be the rare +EV situation, but for the most part, this is a losing proposition, especially bad for totals. Often I see the justifications "I always lose by the hook...", "it's saved me too many times...", "it only costs me if I lose..." Regarding the last justification, this just isn't the case. If you're betting $120 on a game, you should be winning $109, not $100. So, it costs you when you win too. The other night, I saw a regular poster buy a half point to get an NFL total of 35. Anyone think buying on or off 35 is worth 10 cents? The poster lurkerforages has posted some very valuable content on the value of points. Do a search. Wish he posted more frequently.

6. Jumping on the bandwagon. "everyone's on team x...". Never mind the fact that the line is now probably inflated...

7. Betting big parlays and teasers "for fun".

There's undoubtably a lot more, but I'll stop here as I've strayed quite a bit from the original topic and am bordering on rambling

. This probably belongs in a separate thread anyways. Constructive follow-ups always appreciated -- good or bad

 

[oldmanTED]

Shrink:

In all due respect, I've been in this business over 30 years and know exactly how difficult it is to achieve 55%-60% on a yearly basis, as personally in my prime I hit a high of 63% for the year in all sports total, while hitting a low of 48% in my worst year. I have crossed pathes with many who have achieved 55%-60% regularly, but were busted because of poor money management. The circle of people I travelled with were some of the best handicappers I've seen but lack of discipline sent them packing.

 

[miamiman]

"picasso " - Your points 1 to 7 all mean the same thing - poor management of money.

It's hard to explain but people get carried away after a few wins and plough in to their detriment, it's called GREED.

Discipline is the key as the previous poster noted.

 

The point that needs to be made is that it's also a question of implementing a money management plan and STICKING TO IT. There are quite a few people who start out saying "I'm going to stick to my money management plan" and for a few weeks it works out ok but then one bad night and someone gets an urge to chase and then the bankroll goes FLUSH down the toilet.

Most common answer given to the above scenario: "I had poor money management"

Yes you did and no you didn't.

sb

 

[MaxValue]

If 5% is too much what would be an ideal percentage for a flat bettor at 54% win rate?


Max Value

 

[picasso]

<BLOCKQUOTE class="ip-ubbcode-quote"><font size="-1">quote:</font><HR>Originally posted by miamiman:
"picasso " - Your points 1 to 7 all mean the same thing - poor management of money.
<HR></BLOCKQUOTE>

Perhaps. I guess it could be taken that way, as yes, it is all about money. But when I hear the phrase "poor money management", I think in terms of over-betting one's bankroll. For example, the 10 to 50 unit 'locks' that wipe out a bankroll...that sort of thing. My point was that even the strict 1 unit per game bettor is fighting a losing battle if he's doing some of the things in the list. The items I listed were intended to fall under the categories of discipline and value.

Thanks for the response. A good thread. And hopefully, one that will help people.

 

[Dweeb]

In the article, Fez wrote: “For example, anyone hitting 54 percent, but betting five percent of their existing bankroll per play, is certain to eventually go bankrupt. That’s a mathematical concept that is far from obvious.”

And Max Value wrote above: “If 5% is too much what would be an ideal percentage for a flat bettor at 54% win rate?”

- - - - - - - -

Hey Fez, hope you’re reading this:

Here’s a follow-up question:

Let us say that I can win ATS at the modest rate of 54% consistently, just for the sake of this discussion.

You say (given this long-term rate of covering the spread) betting 5% of my bankroll on each play is excessive. Please discuss the mathematical formula one should employ to determine proper bet sizing, given you know (approximately) what your long-term win rate is. Your article let me hear the sizzle – but I never tasted the steak.

Thank You
Dweeb

 

[Illini]

My question for Picasso and the other sharpies is about the -120/EV games. If you like the dog at +3 -120, do you play it? Or is -120 always too much juice for you guys?

 

[wantitall4moi]

Money management is a misnomer. To me, making "unit" bets is bad money management. Meaning rating plats in terms of stars. units, whatever.

Because at that point winning percentage is a non factor. A guy could be hitting 70% of his small plays, and 30% of his big plays and be almost broke.

Also 52.7 is a non issue these days as well, unless you are playing with a local or strictly in Vegas you don't lay -110 anymore. A vast majority ofplaces are -107, and you can even get -105 on certain days or at certain shops. Also some "free vig" nights at some places. Which enough guys do not take advatange of because they are worried about "steam" and being on the "wrong" side of a line move. But in football if you bet with no vig every game, it would out weigh the games you were "wrong" on in the long run.

Also for a flat unit bettor 55% isn't going to get you rich, even if you are betting huge amounts on the games. Because it is all relative. The only way to really show a profit at 55% flat betting is to have a ton of volume. That is why you need to be creative in how you bet.

And if a guy is hitting 55% and straddling his bets sizes, then it doesn't matter what percentage he is hitting at. That is why I say straddling bets is in definiion poor money management. Because there is no managing involved. You are betting willy nilly as your heart desires. Stats and trends and handicapping don't matter. If you pick 55% then whatever your opinion is will still be 55% , no matter how strong it is. The only way it MIGHT vary is if you are using other peoples plays as your big plays, and are lucky enough to play the ones that win.

But eventually over the long run you willllsoe all that money back and then some if those "large star" plays lose.

Then it brings in the psychological factor, and that is another story for another time.

The guys that profit the most consisantly are hitting at exactly 50%. Those are the guys playing angles, taking leads, buying back, trying to scalp when they are available. Reducing your risk is the only money management answer there is.

Hedging might be seen as the "puss" way out, but the guy is cashing. So what is the point? So he "lost" 40-50% of what he "should" have won. But have of something is better than none of a lot.

people lose because they don't have a long term goal in mind, or get caught up in the here and now. I said it in a post a long time ago. I don't even watch games I bet. I place the bets and almost never even check the scores. I don't break down each and evey loss, like a lot of people do. Worrying about a bad beat or some funny business. Just do it. Take as much of the gamble, and as much of the mental/psychological out of it as possible.

You will be a lot further ahead. But if you are doing it for fun, then you expect to lose. So all the money management issue are moot then anyway.

 

[TheGeneral+]

I have not read this entire thread yet, but let not forget, Money Management is KEY to the new player. Many regulars here have their own strategies, but in teaching the new players, MM should be an early lesson in class.

 

[wantitall4moi]

That is why I say, they should flat bet. that is the only money management there is. And the by product of flat betting is that it will show if a person can hit the rate necessary long term to show a profit. Betting 50 here and 100 there, then maybe a 250 here, what is that doing? And how is it helping a guy figure anything out?

So a guy gets lucky and makes a few hundred bux when he hits a couple bigger games. More than likely that streak will end and he will lose. Then the chasing begins, and the "I made money the first month I will get it back begins". The worst thing that can happen to new gamblers is to go on a hot streak early. That makes them think they are actually good.

Like I said, that is where the psychlogical aspect comes in, and that is a different topic altogether.

 

[BrianG103]

Doubters would say how can their be money management in our hobby called Gambling?

One way or another you're eventually going to lose.

 

[wantitall4moi]

In terms of what percentage of your bankroll to bet. That is tricky as well especially in the very beginning, and just how big your bankroll is in the first place.

Say you start with 10K, most definately more than most start with, but in all truthfullness not even close enough to expect to make any appreciable profits.

But say you make 2% plays. That is what I started out with. And say you make 5 plays @ $200 per. That means your bank roll is now at $9000 with $1000 pending. If you go 0-5 that first day or first part of your day you are already down 10%. But to maintain an equal expectation rate you have to keep with the $200 plays. It is borderline but at 200 of 9000, that is still 2.2%, Doesn't sound like a lot, but it is a 10% increase over the original 2%.

So take it to the next step, and say you go 3-2 in the next 5 plays. If you are laying -107, and betting exactly 200, not 214, then your bankrol is now at 8560.74.

So now you have some assessing to do. Going 3-7 might mean a couple things, a bad first week, or a bad handicapper. You did go 3-2, but again that is short term, and even though you hit 60% in week 2, you still have to lower your bet amount. Not interms of percentages, but in real money. So that is a double edged sword, and you have to actually pick a higher percentage just to get even.

Obviously going 0-5 is an extreme, but shows what CAN happen, and the difficulties guys betting flat have to face. But that is why you don't want to start breaking it down day by day r week by week. So even at 2% (what some would say is way too small)and having a losing streak early on, you have already put an extra burden on yourself to do better just to get back even.

But that is why you keep with a plan, eventually you will start profitting (assuming you can hit a winning percentage) in the long run.

And taht is why I say it is imperative for guys starting out to flat bet and track there wins and losses. Because otherwise they have no way of determing if they can indeed pick a high enough percentage.

But as with anything this relies on some success early. One bad week won't kill you, but it can hurt, even at small amounts. But as long as you are in the game, and stick to the plan, and pick enoug winners then you can overcome it.

 

[MaxValue]

Charlie..you might want to check the threads you start to see if people have questions or suggestions for you.(like me)

Thanks

Max Value