What is Pabrai's Blackjack Secret?

[clutch]

I must admit I don't understand how the Martingale system purports to work since it seems to imply that spins are not independent of the previous spin.

 

But the argument on Labouchere is actually the opposite. That spins are independent.  The logic is simply to take your win off the table and double down every time you lose.  By simple math, as long as a winning spin eventually comes up you will ultimately win back that original $1.  Yes you could be betting hundreds of thousands of $ to win back $1 if enough spins go against you in a row but the math is sound.

 

Labouchere method spreads it out so you don't double every time but its the same logic and math.

 

The problem is when a long series goes against you, the table limit comes into play quickly and you lose a ton.  Reverse Labouchere therefore switched it around to use that table limit in your favor.  Instead of doubling down when you lose, you double down when you win.  In a normal sequence you will continue to lose $1 each series but eventually a long run will put you at table limit where you stop, pocket the money and start over at $1.  The risk you take is that the small losing bets while waiting for a long run of wins could exceed the amount you win over the long streak. 

 

Whether you buy into it or not, I'd suggest the book. It's a fun read and goes into a ton more detail and reasoning than we are talking here.

 

There are people who game the table limit by forming a team -- when you reach your limit, another person comes in and places the max limit with you and so on. This can allow you to stretch the system by 3-4 runs I guess.

 

But the more important limit is your own bankroll...

 

If anyone is still convinced that there is a winning system, try your luck (without your precious money in play) with this simulator:

https://www.bettingsimulation.com/

 

[writser]

Sanjeev & Writser,

 

I'm not even searching - desperately - for DooDiligence's hurt feelings report once uploaded here on CoBF! [ : - ) ]

 

I've always found Writser's investment style fascinating. I suppose you guys are much more transactional in your investment style than me, which I think is perhaps somewhat related to taxes [i'm taxed on everything I do - no four letter abbreviation tax free account type available for poor me!].

 

I also consider Writser's comment "non-a$$hole", because it's actually a good explanation of Writser's modus operandi.

 

Have a nice weekend to you both! [ : - ) ]

 

Maybe taxes are part of it. Yeah, I only pay a flat wealth tax, no capital gains, long-term, short-term, etc. So taxes are basically never a consideration. For some short-term trades might be unfavorable, doesn't matter for me.

 

But mostly think investing style is a question of what suits you / personality. I have a trading / math background, I like investments and trades that I can quantify. That's both a strength and a weakness. It means that sometimes I find a quirky situation where I can make money, but it also means I have a hard time judging business strategies or envisioning what a growing business looks like in ten years. For example, I never  bought Google even though I think I was ahead of the curve in understanding how good their products are because the business was always too hard to quantify for me. It is my dream that I find a great growth stock once and have the conviction to buy and hold it - so far I haven't managed to do that.

 

I'll try not to further discuss Martingale / Labouchere because it is tiresome. If you still think these strategies work you are the casino equivalent of a flat-earther. The facts are on the table, science has proven you are wrong but you are too stubborn, lazy or ignorant to understand it. Good luck with investing if that is your attitude ..

[Dalal.Holdings]

It's situations like these where Munger's inversion rule works like a charm. If these advantages existed for gamblers, the gains would have long ago been had, casinos bankrupted, and the advantage "arbitraged away"...

 

Ed Thorp/Claude Shannon worked hard on developing methods for projecting the physics of the roulette ball for a reason (building the world's first wearable computer in the process)...if there were lower hanging fruit they would have grasped for those. The fact that they didn't tells you about the viability of Martingale, etc. So yeah, always invert.

 

Here Thorp discusses his Roulette strategies and Martingale as well:

 

http://www.edwardothorp.com/wp-content/uploads/2016/11/SystemsForRoulette_l.pdf

[EdWatchesBoxing]

Having spent a lot of time in casinos and doing some card counting, The gaming industry depends on people executing these "strategies" for profit. Eventually, I think people will figure out (with their own losses) who has the real edge. The casino will eventually cut off any real edge someone's discovered. I think poker is probably the one exception. Another one might be if you get enough comps.

 

I still play poker for token amounts, as mental exercise and discipline practice. However, sometimes I wished I'd never come across casino gaming.

[Jurgis]

Winning in casino is simple: go to Vegas and put all your money on red. If it doesn't stop on red, don't put the money there.

[Cigarbutt]

An aspect of the conscious or unconscious appreciation of the House edge as a pure mathematical disadvantage is that people, often, compound the issue by adding the dimensions of the gambler’s and the hot-hand fallacies. The added dimensions do not change the mathematical outcome but tend to reinforce the notion that people have some form of control on the outcome.

 

Another interesting feature is that, when casually discussing the outcome of casino adventures, i only come across the 50%-edge of people who actually “won”. i wonder to whom the other people go to in order to share their experience. Most people probably spontaneously noticed the mathematical error (apparently a common conceptual difficulty for the common player) in the previous statement, assuming the players stay long enough at the table(s).

 

Gambling is an odds game and it’s difficult to see how skill can make a positive difference. This concept though is a reminder on how hard it is to beat the market over the long term, especially when adjusted for the skill-edge-fee effect. It is said that 80 to 90% of funds report inferior results (vs the indices) over the long term. i wonder how i end up reading only the prospectus that say they will.

 

[Guest cherzeca]

gambling always seemed to me to be an exercise for a person to feel/be special.  most people understand they will likely lose money, but if for some reason they win money (like the one shot in a golf round that was just right), then they have a halo of specialness surrounding them...until they lose it all later.  after all 90% of us think that we are above average...

[Gregmal]

Gambling is entertainment. You pay to be entertained. That's all there is to it.

[writser]

Gambling is entertainment. You pay to be entertained. That's all there is to it.

 

That's also my approach to active investing.

[Guest cherzeca]

Gambling is entertainment. You pay to be entertained. That's all there is to it.

 

That's also my approach to active investing.

 

funny.  you have to laugh to keep from crying.

[Jurgis]

Gambling is entertainment. You pay to be entertained. That's all there is to it.

 

That's also my approach to active investing.

 

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