Know when to hold 'em, know when to fold 'em
Las Vegas houses some of the world's most magnificent hotels. The Wynn, the Encore, the Bellagio, the Venetian, the Palazzo, the Palms, the Trump Hotel, the Aria, the Mandarin Oriental, the Mirage, the MGM Grand and Caesars Palace, to name just a few. And Caesars Palace in particular. It's the most colossal hotel and casino complex you have ever seen.
Begun in 1966, it now boasts six massive towers. The Forum, Roman, Centurion, Palace, the Augustus and now the Octavius. It has 3960 rooms, eight Roman-style swimming pools, 160 restaurants and shops, four gigantic ballrooms and three wedding chapels.
The game in Vegas is to wow you with so much pizzazz that you don't see what's going on until it's too late. The classic example is the Palazzo, which is completely indoors and designed to feel like Venice at 8pm at night all day. Who wants to gamble at 9am? At the Palazzo, you do.
Of course, most people buy into the whole thing and have a blast - they go hard, spend their money and retire hurt with lifelong memories that make it worthwhile. But stay long enough and you see through it, if you care to, which is why Vegas is only ever a place you visit. It's not a place you live because if you stray too far from the game plan, walk about during the day, and stop to notice what's going on, then your epiphany will be that all those hotels, all those towers, all those incredible casinos were built on the backs of losers.
It is rather incredible, really, that despite Caesars Palace standing right out in the middle of the Strip as a gigantic, unembarrassed testament to the odds at a casino, people still turn up to play. Maybe that's why they bus you straight into the underground car parks - so you don't look around, so you don't notice, so you don't begin to question too soon just where all the money came from.
The market cap of Tabcorp ($2.5 billion) and the market cap of Tatts Group ($4.6 billion) are other monuments to that. The spirit of the gambler. Faced with almost certain loss, gamblers still turn up with hope in their hearts - a noble trait, almost. Although there is a fine line between courage and stupidity.
And the comparisons with the sharemarket are inevitable. In the casino, they distract you with tits and feathers and disable you with drink. Meanwhile, somebody has their hand in your back pocket. In the sharemarket, they dazzle you with colourful software, trading platforms, average returns, IPOs, dividend yields, franking, charts and the media iced by jargon, urgency and ever-thinning sophistication. Meanwhile, someone has their hand in your SMSF.
And the marketing is the same. Drive from the Las Vegas airport to your hotel and you will hear the taxi driver's story of the girl who put a single dollar in the pokie machine at the airport and won a million dollars; a delusion of success reinforced by casino-floor plasma screens showing winners and their hauls.
And so it is that the sharemarket also blinds us with books about "How I Made $2,000,000 in the Sharemarket", by glorifying the success of Warren Buffett, exposing us to pictures of Rene Rivkin's yacht, by lauding the winners and forgetting the losers. One of the platforms of success in any form of betting is that while the winners buy Ferraris so we will notice them, the losers seek the dark corners of anonymity. Perfect for an industry that sells transformation. Thankfully, no one would publish a book called "How I Lost My Kids' School Fees in Leveraged Derivatives". Wouldn't want the losers telling their stories, would we?
People love gambling, you can't stop them and they don't want to be stopped. The confusion for some is that the bookies have moved in and are using the jargon and integrity of the sharemarket built over hundreds of years as a camouflage for short-term, highly leveraged, terribly risky bet taking. Let's face it, the sharemarket has become a highly marketed gambling option.
But before you give up, you might like to know that while betting on sharemarket prices with leverage and in the short term has proliferated, the investment market ploughs on in the background. It is still a game of odds, but if you can ignore the pizzazz, resist the urgency, turn off the noise and extend your horizon beyond having a blast, the odds are as good as they always were.
For a free trial, see marcustoday.com.au.
InvestSMART FORUM: Come and meet the team
We're loading up the van and going on tour from April to June, with events on the NSW central & north coast, the QLD mid-north coast and in Perth, Adelaide, Melbourne, Sydney and Canberra. Come and meet the team and take home simple strategies that you can use to build an investment portfolio to weather any storm. Book your spot here.
Want access to our latest research and new buy ideas?
Start a free 15 day trial and gain access to our research, recommendations and market-beating model portfolios.Sign up for free