This years version of the Melbourne Cup has been run and won some punters have walked away with small fortunes while others well lets just say they are looking forward to the 2017 edition.
As the dust settles it dawned on me that the investors could actually learn a thing or two from professional punters. I know what you are thinking what could an investor possibly learn from a gambler?
The first thing that strikes me as a similarity between professional punters and professional traders is the very low percentage in each “profession” that actually makes money from their chosen job.
As traders or investors we are taught to stick to our plan and wait for the right opportunity, patience being the key. Having spoken with professional punters they have also told me that waiting for the right bet is also the key to success.
This lead to me too look at how professional punters approach their “investments” to ascertain if there is anything investors could actually learn to put into practice.
Form
The first thing a professional punter must do is to look at the form of each horse in the race. I would equate this to an investors doing his research on the fundamentals of a company or trader looking at the past price history of a stock.
What strikes me is that in a race such as the Melbourne Cup there are 22 horses running on which they will need to do the form and rate each horse against the next. As an investor you may like to ask yourself how often would you research 22 companies then rate each against the other before investing? What it says to me is that investors should understand each company in a sector before deciding on which company is the best investment.
Staking
As an investor or a trader how much time do you give to what percentage of your bank or portfolio should you invest in a particular company? Professional investors review all of their past results and continually monitor their success rate and percentage returns so they can fine tune their staking approach.
Traders may like to take a look at the Kelly Criterion which many professional punters use to optimize their bet size and over all returns.
Conclusion
It is easy to get lost in your own world sitting behind your desk getting caught up in the daily share price movements. Truly great investors/traders are able to look outside their own sphere to take their skill set to the next level. Here I have suggested professional gambling as a possible inspiration for new ideas but no doubt there are many other fields we can all learn from.