An Edge Is An Edge

Should you, without other information, always bet that the sex of a new born child will be male? Yes, according the the CIA Fact Book. At birth, males outnumber females 106 to 100. or 51.46% of births are male. 48.54% are female. After 100 bets, your expectation is that you would be ahead by 3 bets.

That’s why Las Vegas works. It is easy to search the internet for house odds advantage and find that at any game, there is a house edge. Usually not large. Blackjack is as low as .2% in some case, roulette is around 5.5% and craps varies from 1% to 11% depending on the proposition bet. Low price slot machines are called “one-armed-bandits” for a reason. 15% edge and more.  Interesting aside. The deeper you are in the aisle of machines, the worse the odds. Visible machines pay better. To lure in new players I suppose.

The law of house odds is this.  “If there is a small advantage applied many times, profit is inevitable.”

It’s the many times that makes the difference. As the player, the bigger the size of the house edge, the shorter your time to reach zero.  If you are playing a 4-deck Blackjack game with odds in favor of the house at about .51% the expectation of your stake after 100 hands is 60% of the beginning amount. After 1,000 hands it is less than 1%.  With roulette at 5.5% house edge you can expect to reach .3% of your stake after 100 spins.

You better believe gambling is entertainment or you may not enjoy your stay.

What about life? Are there actions you can take that provide a slight edge. For instance, is “do it now” slightly better than do it later?

Suppose your present state is characterized as 1. Further suppose it is slightly better to act immediately instead of putting things off. Call that advantage half of one percent. (0.50%) If you have 5 choices a day, you have 1825 in a year. Your initial condition of 1 will grow to 8,975 by year end using the half of one percent advantage. It will stay at 1 if putting things off is neither positive nor negative. A nice gain for doing the things now that you will end up doing anyway.

Edmund Burke has said, “No one could make a greater mistake than he who did nothing because he could do only a little.” By extension. “No one could make a greater mistake than he who did nothing because he could gain only a little by acting.”

Obviously this is just an arithmetic construction and real life is different, but the point is still clear. Tiny advantages applied many times provide huge overall gains.

You didn’t think Las Vegas hotel owners built those buildings with the profits from the coffee shop, did you?  Use small advantages to build a great life.

Don Shaughnessy is a retired partner in an international accounting firm and is presently with The Protectors Group, a large personal insurance, employee benefits and investment agency in Peterborough Ontario.

don@moneyfyi.com | Twitter @DonShaughnessy | Follow by email at moneyFYI

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