Roulette vs Stock Market.

“You can learn more about the stock market from gambling,
than you can learn about gambling from the stock market”
Ed. Thorp

Expanding on the issue of the “Gambler as Entrepreneur“, let’s see the analogies and similarities between Roulette and the Stock Market.

1. Both offer the psychological excitement of betting your forecast, with the expectation of making a profit.

2. Both (the Stock Market much more) have been heavily researched in order to find a winning method, yet there is still no method widely accepted as such.

3. Stock market technical analysis, resembles finding a biased wheel or reading “roulette patterns“. (looking for the unfindable?)

4. Gamblers and traders, both give a little part of their earnings to “the house”. In roulette this is done by the unfair payout (also called “zero effect” or “house edge”). In trading there are trading commissions.

5. There are academics who argue that it is impossible to be intentionally profitable in either. They base their “scientific” opinion, among other things, on the misleading concepts of “Efficient Market Hypothesis” in the stock market and “Independent Probabilities” in roulette”.

6. Fundamental analysis is like Probability analysis. They are very important and they help us build very rational expectations. But all too often, their findings do not translate into reality. Or it takes too long for reality to conform with the expectations. John Maynard Keynes said: “The stock market can remain irrational longer than you can remain solvent”. I add: Roulette outcomes can remain imbalanced longer than you can remain solvent.

The point of all these analogies is to ultimately understand that Roulette is no different than any other endeavor of life in terms of certainty and risk/profit relationship.

Read also: Gambling vs Trading (a comparison)