Re: Time value of money
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Yesterday Fezzik posted that the Total for the BCS Championship game was too high at 48.5. He was right, of course, and it is now down to 47.
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If this line move could have been reliably predicted, the extra edge advantage could be easily calculated. My gut says 1 1/2 pts on NCAAF total is worth > 1%.
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Fezzik's call got me thinking about the time value of money. How big a perceived edge do you need to tie up your money for four weeks?
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Depends what else you're doing with the money. It isn't tough to get 5% annually on a one month CD right now. Again, easy to calculate your edge, but it's < 1%.
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Is there a mathematical solution to my question or do you guys go by feel? (If someone is a crappy gambler, perhaps it's +EV for them to tie up their money for a month if they have a deep edge!)
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If someone is a crappy gambler, something tells me they don't know when they've got a deep edge. They should invest their $$$ in the 1 month CD I mentioned above.
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