Is the Market Like Sports Betting
 

There are 3 levels of sports bettors as I see it:

Level 1 (The Suckers) - Goes with their "gut", thinks that they're the only ones who see the obvious, follows ATS trends, etc.

Level 2 (The Wanna-Be Pros) - Sees through all the errors of the Suckers. Enjoys pointing out their foolishness. Thinks that vegas wants equal money on both sides, and that lines are generally efficient and that you'll basically break even minus the vig long-term.

Level 3 (The Actual Pros) - Knows to only bet when you have an advantage, but also knows it's possible to have an advantage. Realizes that lines are only efficient if people make them efficient, and is one of the people who does so. Makes predictable returns above average over time.

I am somewhere between Level 2 and 3. Basically because I know Level 3 exists, and in certain sports under certain conditions I'm a "Level 3."

I'm wondering if perhaps the categories are the same for the market.

Level 1 - Timing the market, going with their gut, thinks it's easy to make money etc.

Level 2 - Efficient market, buy an index fund and sit on it because that's as good as you can do.

I basically fall into Level 2 here, but Buffett insists that the Level 2 folks are wrong, and that even regular investors can earn irregular returns. Is is the same, is there a level 3? If so, is it reserved purely for the large trading firms, hedge funds, computer junkies, etc? Or can an ordinary guy find a way to win in the long-term?

Re: Is the Market Like Sports Betting
 

I would say that the market is like sports betting in the sense that the more you know, the better you are going to do, and the more money you can expect to make.

However, it is not like sports betting in the sense that you do not have a big vig to overcome. Commissions are minimal, and there are lots of good mutual funds that charge very low fees. The market creates money and everyone can get a slice of the pie. The good investors will get a bigger slice. It's not like sports betting where there has to be losers due to the vig.

Re: Is the Market Like Sports Betting
 

The Market is like everything in life; there are losers and there are winners. And there are break-even aka average people.

The losers think they're unlucky. The break-even aka average people think things will eventually turn around. And the winners just keep on winning.

Re: Is the Market Like Sports Betting
 

Sports betting is zero sum and the stock market isn't. So a minor difference there.

Re: Is the Market Like Sports Betting
 

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Sports betting is zero sum and the stock market isn't. So a minor difference there.

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lol, what the [censored]?

Re: Is the Market Like Sports Betting
 

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Sports betting is zero sum and the stock market isn't. So a minor difference there.

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lol, what the [censored]?

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Like in sports betting someone wins and someone loses. In stocks, companies grow... Like buying a a total market index you'll come out ahead in the long run, betting every game you won't.

Re: Is the Market Like Sports Betting
 

You are aware that sports book agencies have a spread, and thats how they make money, right?

Re: Is the Market Like Sports Betting
 

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You are aware that sports book agencies have a spread, and thats how they make money, right?

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More like a 10% vig. The same is not true for stocks. Also, stocks go up in value over time, and everybody wins.

If everyone bought 1 share of every stock in the entire stock market, everybody could end up with more money than they started with.

If everyone made 1 bet on every possible sporting event, almost everyone would be a loser, due to the vig. Do you see why?

Re: Is the Market Like Sports Betting
 

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You are aware that sports book agencies have a spread, and thats how they make money, right?

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Yeah, I do this for a living. I'm familiar with it. Regardless it does not change anything about it being zero sum.

Re: Is the Market Like Sports Betting
 

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You are aware that sports book agencies have a spread, and thats how they make money, right?

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lol