Do They Call You a Gambler? Investing vs. Gambling (NFL Edition)
“All you guys do is make bets, just like gamblers.” - Said an Art History major to me...
The biggest issues I have with SOME non-business majors are their comments about Monkeys being gamblers. In response to this, I wrote a satirical paper for a writing class explaining the “practical” uses of finance skills…as applied to NFL line betting. With the season coming to a close and equity markets off to a good start, I thought some of you might find the results funny and interesting.
This past year, the Dow 30, NASDAQ Composite, and S&P 500 all saw returns of 7.26%, 15.91% and 13.41% (16% total), respectively. Needless to say, 2012 was a good year for stocks.
As equity indices only represent one investment opportunity, it is only fair to look at one gambling opportunity, NFL line betting. The return for betting on the most favored team each work for the whole season was only 4.02%. Betting on the top 3 teams and top 5 teams yielded slightly better returns of 9.81% and 5.26%, respectively. While this isn’t bad, none of these returns are higher that those seen in the NASDAQ and S&P 500.
When looking at betting on underdogs, the returns are all negative. Betting on the least favored team saw a return of -37.76% (loss). Looking at the 3 least favored and 5 least favored teams saw returns of -57.82% (loss), and -26.78% (loss), respectively.
So how many of you guys have been called gamblers?
How many of you think you could do better than NFL line betting? ;)