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If you have a better model for the outcome on a Sport than the bookmakers you can make money gambling against them. The reason this doesn't work in practice is
by VBprogrammer 3y ago
If you have a better model for the outcome on a Sport than the bookmakers you can make money gambling against them. The reason this doesn't work in practice is that bookmakers will simply reduce your stake limits, to the point that it's a waste of time, if you beat them consistently.
There are fewer problems like this in the stock market. However, getting a better model than the players in the market is arguably more difficult. However, with the resources of Berkshire you can do things which a retail investor couldn't dream of, stuff like using satellite imagery to approximate performance. Or paying the CFOs latest squeeze for information (or at least the same but laundered through a 3rd party).
- quartesixte 3y agoI guess a good way to extend the sports betting model analogy is that Buffett’s moves are so large + controlling seats on boards is equivalent to sports players fixing games in response to bets made on them? Buffett wants stock to go up, he can tell the company to take actions to do so. Something individual retail traders (or most funds for that matter) cannot do. As a layperson, I always wonder: is there some equivalent of the Heisenberg uncertainty principle at play in the market? There is no way to make an observation (in this case, a trade) without altering the very thing your are observing (the market).