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Would you gamble on this ?

Discussion in 'Investor Psychology' started by Ace in the Hole, 31st Jul, 2015.

?

Would you stake $1,000 of real money right now for this opportunity?

  1. No.

    30 vote(s)
    61.2%
  2. Yes.

    19 vote(s)
    38.8%
  1. Ace in the Hole

    Ace in the Hole Well-Known Member Premium Member

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    I'm interested in the risk profile of members here.
    Please answer honestly as if it was a real situation and you had to make a decision right now.
    1. Biased coin flip, result either heads or tails.
    2. Heads you win, tails you lose.
    3. Stake to play is $1,000.
    4. Payout is even money, i.e. if you win, you get $2,000 back for your $1,000 stake.
    5. The bias is that heads results 2/3 of the time.
    You only get 1 attempt, will you play?

    Secondary question not part of the poll.
    If you could increase your stake, still limited to 1 attempt, how much would you be willing to risk in real dollars for this positive outcome expectation random event?
     
  2. devank

    devank Look, lets just get on with this, ok? Premium Member

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    I believe in honest statistics. As $1000 won't make me broke I would gamble.
     
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  3. wylie

    wylie Moderator Staff Member

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  4. Hodor

    Hodor Well-Known Member

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    No. Capital preservation is part of my strategy. Avoiding absolute losses is key and staying away from thinking that takes me away from my goals.
     
  5. Steven Ryan

    Steven Ryan Mortgage Broker Business Plus Member

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    Absolutely.

    Like @devank, I'm all about the numbers.

    I'll take odds like this all day long. Win some, lose some, but come out on top overall.
     
  6. spludgey

    spludgey Well-Known Member

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    @Steven Ryan, does CBUS have an option for this in their new super fund?
     
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  7. Ace in the Hole

    Ace in the Hole Well-Known Member Premium Member

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    There is no right or wrong, it's merely a reflection of your risk profile and current status.
    However, the reason I made it $1,000 is because it's enough to bother you for a minute if you lose, but not enough put much of a dent in your progress.
     
  8. KDP

    KDP Well-Known Member

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    I'm in the in camp definitely.

    For the second question, I would also probably take the biggest bet that I could and sell off equity shares in the bet at a premium.
     
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  9. Ace in the Hole

    Ace in the Hole Well-Known Member Premium Member

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    I'm with you, but I'd struggle coming up with a figure to lay down even at such a generous positive expectation.
    Convincing the wife would be the hardest part....
    It's a tough one.
     
  10. EN710

    EN710 Well-Known Member

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    At my current financial situation, no.

    when I have $3000 to spare then yes. Enough buffer for a comeback.
     
  11. Steven Ryan

    Steven Ryan Mortgage Broker Business Plus Member

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    Yes. I believe it's the "buying shares in an individual company" option.
     
  12. Perthguy

    Perthguy Well-Known Member

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    No for me. If were were drinking at the pub, you might get me up to $10. That would be my limit.
     
  13. Leo2413

    Leo2413 Well-Known Member Premium Member

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    Yes - but no more than 5k. My reasoning is:

    1. lose 5k (no feeling really)
    2. Win 5k (cool bananas)

    The odds are in my favour 66.6% so its worth it for fun. (i'm assuming i am allowed to choose heads of course)
     
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  14. Leo2413

    Leo2413 Well-Known Member Premium Member

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    Well you would only come out on top overall if you had many turns. Not just limited to 1.
     
  15. Ace in the Hole

    Ace in the Hole Well-Known Member Premium Member

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    Yeah, as an individual I'd probably top out at 10k, even though every dollar bet returns a 133% return, on average.
    The problem is going at it as an individual.
    To complicate the matter further, if you could group up with 2 others and split the winnings, or have multiple attempts (3), that then increases the chance of a return.
    At less than 4% chance of a complete wipeout, I'd sweat out a big number on this.
     
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  16. Steven Ryan

    Steven Ryan Mortgage Broker Business Plus Member

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    I may not have been clear :) My point was that if I take 100 of these one off bets over my lifetime, I will be on top. Only being able to have one crack at this particular gamble is of no consequence if my philosophy is to take odds like this whenever they present themselves.
     
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  17. Tonibell

    Tonibell Well-Known Member

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    Stakes too high for me !

    In poker or blackjack I know the odds well - but could not bet that amount.

    Would need much better odds.
     
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  18. Bran

    Bran Well-Known Member

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    Nope.

    Doubling my money isn't enough to set me free, thus for the risks, no way.
     
  19. neK

    neK Well-Known Member

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    $1,000 won't make me rich... i wouldn't gamble.
     
  20. Ace in the Hole

    Ace in the Hole Well-Known Member Premium Member

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    50/50 in the polls so far at 7 each way, interesting and surprising.
    Quite a risk adverse group really, but no right or wrong.
    Maybe the same poll on a stock forum may produce a different set of results.
    It does say a bit about the personality traits of property investors in general.

    As Steve confirms, the more of these one off positive expectation bets you have over your lifetime, the further ahead you will be in the long run.
    Only exception is if the $1,000 is too much to recover from if you lost it, that would be the only reason to decline the bet apart from dealing with psychological pain of losing if you can't handle a loss, even if you could afford it.