Money management

Money Management is as critical to a sports investor as picking winners. I have devoted many hours of careful analysis and math to optimal money management systems, which I have painstakingly outlined in my Money Management articles. Sports betting is more high risk (higher volatility and standard deviation of return) than stocks, and also much more high return. When compared with stocks or bonds or real estate, it also has a much higher risk adjusted return (Sharpe), and is a more attractive overall investment. (My investments have a Sharpe Ratio of 0.715 compared to the S&P 500's SR of 0.406)

My Money Management articles outline how to adjust your bet sizing based on your goals (expected return vs. probability of positive returns), your investment length (one season or many), your growth preference (flat or compounding), your risk tolerance (high or low) and the proportion of your overall bankroll which is made up by sports betting.

In general, I would recommend that beginners wager 1.5% of their initial bankroll per star in football. I have won 56% of my Football Best Bets over 22 years, and while I continue to improve my methods I will use 56% as my expected win percentage. I anticipate approximately 160 Best Bets, which should add up to around 400 stars. For basketball, I would recommend about 1.1% of initial bankroll per star. Over 22 years, I have won 54.6% of games, and I will conservatively set my win expectation at 54% going forward into 2009, and I expect to bet approximately 400 Best Bets and 1,050 stars. It is always better to set conservative expectations to avoid over betting. For subscribers who purchase the Combo package, I recommend 1.4% per star in football and 1.0% per star in basketball, as overall variance is greater (although variance as a percentage of total wagers is lower).

Factoring in the Cost of my Service

The cost of my football service is $1,295, so you must factor in that cost when doing the above analysis. If my expected win percentage is 56% (my long term percentage) on 400 Stars per season, then the average profit would be +30.4 Stars per season. If you had $10,000 that you invested in a football season and $1,295 went to pay for my service, then you would have $8,705 left for wagering. At 1.5% per star, you have an expected profit of 45.6%, and with a bankroll of $8,705 that's an expected net of +$2,675 after factoring in the cost of my service.

Many subscribers save money by buying my Football-Basketball Combo package each year for $2495 (rather than $1295 for football and $1695 for basketball, or $2990). If you have $12,000 to invest for the year and decide to pay for my Football-Basketball Combo package for $2495 then you have $9,505 remaining for your working bankroll. When using the Combo package, I recommend 1.4% of your bankroll per Star for football and 1.0% per Star for basketball if you plan on using one bankroll to cover both seasons. I expect about 30.4 Stars of profit per year in football and about 35.7 Stars of profit per year in basketball, which translates into an expected profit of +42.56% of your bankroll in football (30.4 stars times 1.4% per star) and an expected profit of +35.7% of your bankroll in basketball (35.7 stars times 1.0% per star). That's a total expected profit of +78.26% of your bankroll, which is about $7,438 in the case of a $12,000 total investment ($9,505 * .7826). After taking out the cost of the service ($2495), you still would have $4,943 total profit, which is an astounding 41.2% expected return on 56% winners on my Football Best Bets and 54% winners on my Basketball Best Bets. Of course, there are going to be years better than that and some years worse than that, but it doesn't get much better than an average return of 41.2%.