James Alberino, 7/6/16
In the stock market it’s not as much about which company you invest your money on as it is about when you invest your money on that company.
Take Facebook for example. At its IPO Facebook opened at $38 on May 18th, 2012. By August that same year Facebook was down to $18 and if you invested $1,000 at IPO you just lost $526 in three months.
At the time of IPO Facebook was all sizzle and no steak in terms of it’s business model. It was overvalued because as much as Facebook’s technology has changed the way we communicate (forever?) it still failed to produce a solid advertising revenue stream, the highest source of profit for most internet companies. Its advertisements were choppy and low budget and revenue wasn’t as high as expectations.
Fast forward to July 2016 and Facebook sits at $114. The main difference maker was the fact that Facebook figured out how to maximize advertising revenue and several of their paid advertisers are investing significant money into Facebook. The best part for Facebook is that their profit margins on their ad revenue is significantly higher than other companies who have higher costs to get that revenue.
People who dug up this under-the-radar information before everyone else made serious money. The people with little knowledge (mainly following headline news) lost money or missed the boat like many sports bettors do during NFL season.
Take a look at a scenario that happened between Week 17 and Wild Card Weekend in the NFL last season:
The Seahawks were +7 @ the Cardinals in Week 17 – the Seahawks were coming off a bad loss to the 14 point underdog Rams and that made them 7 point underdogs for this game. But they were revenging a loss to the Cards from earlier in the season and wanted to be sharp going into the playoffs, so this game was big for them. On the other hand, the Cards didn’t need to win as badly. They had clinched the #2 seed for the playoffs and if the Panthers beat the 6-9 Bucs then the Cards were locked into the #2 seed and had no incentive to win. In fact, as I sent out to Spread Investor clients, the Cards may use this game to rest some of their starters if they look up at the scoreboard and see Carolina winning. Carolina won 38-10 that day, Arizona benched their starters in the 3rd quarter and me and my clients won big on the Seahawks as they won 36-7.
The following week the Seahawks were -6 @ Minnesota. The betting handle was heavy in favor of Seattle after seeing them blowout the Cards and even more so because the Seahawks put a 38-7 beatdown on the Vikings earlier in the season. Most of the public didn’t know though that the Vikings had 4 injured defensive starters out for the first matchup who were now healthy for this game (1 of those injuries occurred in warmups and the other on the 1st series, completely ruining the Vikings gameplan and sending the team into a panic). They also didn’t factor in how cold it was going to be in Minnesota that day – it was forecasted to be -4 degrees at kickoff and in my research I found that QBs in the 5 coldest games in NFL history have a career completion percentage of 48.6%. Pretty hard to grip a ball when it’s freezing out. How many points could the Seahawks even score to be laying 6 points on the road? Minnesota was giving up just 18.6 ppg for the season and could control the clock with Adrian Peterson.
The Vikings +6 covered throughout the entire game in a 10-9 loss that the Vikings completely outplayed the Seahawks and would’ve won had Blair Walsh not missed a chipshot and Russell Wilson not had a completely lucky 35 yard pass after a fumble that could’ve sent him back 15 yards. Spread Investor win for clients.
It’s not who you put your money on as much as it’s when you put your money on them.
What makes sports more challenging than stocks is that sports teams can change drastically from week to week because of matchups and injuries whereas companies don’t have this sort of volatility (generally).
Teams can be moneymakers one week and then moneyburners the next.
The other challenge is managing your money. The same way a stock goes up and down throughout the day is the same way your money in the NFL can go up and down from one Sunday to the next. The key is to gain perspective and to look at the entire season as a whole as a 5 month investment with a series of small risks every week. Otherwise you risk emotion taking over and getting in over your head.
Look out for my post later this week on how to manage your money this NFL season to turn a profit.
It’s not easy to profit over the 5 month NFL grind, but if you’re part of the very small few who know how to play the game and handicap the NFL then you’re lightyears ahead of the betting public. Follow me on Twitter @spreadinvestor all summer as I get you ahead of the betting public with my NFL articles.