The Right and Wrong of it All

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iHub users who have spent any time playing the casino game of “Craps” knows that the "atmosphere" is very much akin to that of investing message boards.

How so, you ask? First, let's look at the terminology.

On the investment side we have the interchangeable categorizations of:

Pro vs. Con
Bulls vs, Bears
Longs vs. Shorts
Pumpers vs. Bashers

In Craps, it is:

Do vs. Don’t
Right vs. Wrong
With vs. Against

It's worth noting that none of the above characterizations mean win or lose. They mean the same thing as "heads" vs. "tails" when flipping a coin.

We all know what the investment terms mean. The Craps terms are used to describe HOW a player is betting. It is not intended or construed as a personal negative or an insult. The terms describe a method used by a player, not the player him or herself. Even when it is commented that, “He is on the Right side of the dice” or “She’s against the dice” it describes their chosen method of play, not the person individually.

Now, just like message boards where the vast majority of participants tend to be Bullish, Craps players mostly bet on the “Do” or “Right” side of the dice. This means they bet on numbers expecting that number to be thrown before a 7. At most times you won’t see anyone playing the “Don’t” or “Wrong” side because 1) most players don’t understand it, and 2) it’s viewed as “negative” by players who do not understand the true nature of the game. The simple fact of the matter is that the Don’t wager simply means you are betting on the same outcome that the casino is – that a 7 will be thrown before the number being bet upon is thrown.

The casino does not care which side you bet, nor whether or not you win or lose. They want players taking part in the game. They know that over the long term, in aggregate, they will win x% of every dollar that is wagered. If nobody ever won there would be no game, so they are perfectly content to see people win. Winning creates action and action creates dollars flowing across the table, and they rake in their small percentage off the top of the overall action. That is a mathematical certainty over the long long haul, and they are neutral toward the individual bets and players. They also take great pains to ensure a fair game; all bets and bettors are welcome as long as they comply with the rules of the game and the house rules of conduct. The casino knows that if they don’t run a fair, unbiased game that they will lose their customers and go out of business. The rules of the game are long established and easily known by all who participate. The casino bans users who try to do anything that tries to change the outcome of the game, even if that change favors the casino. They know that allowing such conduct over the long term hurts their legitimate players and themselves.

A very important concept of Craps is that no matter which side you bet on you are betting With or Against the DICE, not With or Against other players. The fact that on any given roll of the dice one player may win while another may lose is irrelevant. The rules are known, the odds are known, and all of the bets are available to everyone. The throw of the DICE determine the outcome; those who speculated on the correct outcome win, and those who didn’t lose. Everyone is free to bet however they wish, and their bet has no affect on other players. It doesn’t matter if one players bets $2000 for a six, and another player bets $5 against a six. The rules and fundamentals of the game determine who wins and who loses. The only influence a player has in that outcome is selecting where and how much they wager. Just like investing in stocks.

There is another anecdotal similarity between craps wagering and stock investing. The Don’t wagers are statistically slightly better than the equivalent Do wagers. The Don’t players tend to have a better understanding of the game rules and the mathematical odds. The dealers and casino officials refer to them as “playing smart”.

Now we get to the practicality of the game, but before doing so will point out an oddity in Craps. There are many different numbers and kinds of bets than can be made at Craps, so most players have several different wagers working at the same time. Without going into detail, suffice it to say that because of how the games works, Right bettors win one wager at a time and lose their wagers all at once, while Wrong bettors lose their wagers one at a time and win them all at once. You will see why this is relevant in a moment.

Anyone who has even been at a really hot craps table knows that when the Right bettors are winning the applause and cheering and high-fives are flying, and total strangers who happen to be standing next to each other while playing become each other’s newest, bestest friend. Every “Pay the Do’s!” roll is met with cheering as most of the players collect their winnings. Meanwhile, the Don’t players are quietly losing one of their wagers. However; when that inevitable 7 arrives and the “Right” bettors lose all of their wagers to a chorus of groans, the “Wrong” bettors are collecting a large pile of winnings since all of their bets were won on a single roll of a 7. Strangely enough, some players expect them to collect their win and remain silent for daring to bet Wrong, even though anyone could have freely done so themselves. As mentioned above, over the long term the Wrong wager is statistically the smarter bet, yet most players shun it because they simply don’t understand it (even though it is the easily seen functional opposite of the Right bet). They also frown upon those who make Wrong wagers because they perceive it as a negative bet, when in fact it is nothing of kind; it is simply betting that a 7 will be thrown before another number. Right bettors who truly understand the game accept their loss and acknowledge that the Wrong bettors were on the correct side when they win. There is nothing personal about it; it's simply a matter of choice. Some good luck doesn't hurt.

Humm… sounds like some message boards, doesn’t it? The majority are betting Right – that the stock will go up. A minority are betting Wrong – that the stock will go down. Some Right bettors (the Bulls) don’t want Wrong bettors (the Bears) to participate, and for no better reason than Right bettors frown upon Wrong bettors.

Meanwhile, some Wrong bettors (the Bears) don’t accept that there is a (ridiculous) societal expectation by some for them to contain their exuberance when they turn out to be right. Hell, they shouldn't even think bearish thoughts because it might create bad Karma or something! Who knows... maybe they are given a bad name by the occasional bear who thumbs their nose and gloats when the bulls get bad news, or by people who just choose to not understand the rules of the game.

Funny how that works, isn’t it?

By now you probably get the many morals of the story – for participants on both sides of the investment dialog. If not, then never mind!