I was reading the paper recently and came across an interesting article titled “Have you got what it takes?” The article was about the characteristics required to be a successful sharemarket investor. Many of these lessons are directly applicable to sports gambling so I thought I’d extract the salient details and present a more punting oriented viewpoint.

1. Focus

“The qualities you see in successful investors are similar to the characteristics you see in successful people in most areas. That begins with having clear goals. They start with the big picture and work their way down to the details” – Arun Abey, executive chairman of IPAC Securities

As a punter you should be focused on long term results, not individual events. Often you’ll see punters agonising over bad line calls, poor umpiring and teams failing to cover the point spread. However, to the serious investor these details are trivial. Instead, the sports investor should be analysing their position over hundreds or even thousands of results.

2. Involvement

“Successful investors invest time in at least understanding broadly what investment markets are about, what trade-offs there are and so on.” – Arun Abey, executive chairman of IPAC Securities

It is very important to set realistic expectations and to have at least a basic grasp of the mathematics behind sports gambling. Once you’ve dispelled such nonsense as “hot streaks” and “cold streaks” you will be much better equipped to deal with the emotional roller coaster that naturally accompanies the life of any sports gambler.

3. Discipline

“Successful investors establish their principles and stick to them rigidly” – Jim Clegg, principal consultant with Berkley Group

Successful investors are the ones who know what they are doing. They are not interested in following the market because they have their own differentiated strategy. They are not worried about following “smart money” or looking at price movements. The strategy of course has to be a sensible one or else your money will just go toward your bookmaker’s next Ferrari.

4. Hard Yakka

“Most successful share investors undertake to get to know the companies and industries in which they’re investing” – Michael Heffernan, senior adviser at Terrain Securities

The most successful investors are the ones with the most knowledge. In team sports, they will know how to convert money lines into point spreads. For a given number, they will know what percentage of games land on that number. They will be able to calculate home ground advantage for any given team. They will keep up to date with injuries, weather, team motivation and any other factors that may affect the game. For individual sports, successful punters will be intimately acquainted with the players. Once again the punter will keep up to date with injuries, personal events, motivation, player interviews and any other factors that can affect performance.

5. Patience

“It’s OK to be apprehensive, but the successful investors control their fears in bad times and accept that this is part of being a long term investor” – John Aldersley, managing director of DirectPortfolio

Being a successful sports investor means coming to grips with the fact that you will lose. A lot. There will be days, weeks, months and perhaps even years where nothing seems to be working. 95% of the time your bankroll will be below its previous all time high. Unfortunately this is the nature of the business and if this is not something for which you are prepared, then do not take this on as a serious investment vehicle.

6. Value

Learn the meaning of value. A lot of people say that the best value bet is a winning ticket. However a winning ticket is not necessarily a value bet. For example, in the cricket a lot of bookmakers offer odds on the result of the coin toss. Let’s say they offer odds of $1.95 each side. Further let’s assume some mug actually decides to bet on this event and wins. Even though he’s cashed a winning ticket, it is a poor value bet. For $1.95 to be value, your winning percentage has to be greater than 51.28%. Since in this case your winning percentage is only be 50%, it is a poor value bet win or lose and eventually you will go broke taking these odds.

To conclude the article I’d like to include some words of wisdom from Warren Buffett.

‘While Buffett’s not always right, he says he wants to be able to explain his mistakes – and so he never invests in anything he doesn’t understand. “Risks comes from not knowing what you’re doing” he says’

This is a philosophy with which I wholeheartedly agree. If you do not have a logical, sound reasons for every wager that you make, then it is necessary to take a step back and re-evaluate what you are doing. However, if you are confident that your strategy will work in the long run and you work diligently to apply that strategy with discipline and rigour, then maybe, just maybe your bookmaker will be paying for your next house, instead of you paying for his.