R P S B
Relative Performance
Stock Betting
This title does not indicate a belief that providing for the investor’s relatives is what drives all investing, though for some it is the basic motivator.
It is intended to observe that all investment decisions are made reflecting the view that the investor believes that whatever is purchased will perform better and achieve the intent of the investor better than alternative investments. An amount invested in gold will do better than a similar amount invested in silver, jewels, government bonds, real estate, or stocks. In creating a portfolio of investments, a balance is sought in the selection of component investments so that the overall value of the portfolio will achieve the desired result of increasing, or at least maintaining, value relative to something.
The something could be a market measure. a fixed value of return in a selected currency, or the market value of specific real property. Investing is not an activity measured by absolutes. Successful investing is doing better than alternatives and doing better means achieving a greater value.
The non-leveraged approach of hedge fund partnerships, using long and short positions in stocks to outperform the market, was developed for wealthy individuals shortly after WWII. It has since evolved into highly leveraged, speculative partnerships and private equity firms. Some of which have done very well for both their investors and managers. The partnerships are very performance competitive.
Investment funds, both with fixed outstanding shares, closed-end, and open-end, mutual funds, were created by investment advisors to serve investors and the advisors. Arthur Lipper Corporation, a NYSE member firm, created a mutual fund performance measurement service for institutional investors. Because the funds were required to publish their per share Net Asset Value daily, it was possible to calculate each fund’s relative performance on a basis not previously made available. Relative performance became the key factor in the funds marketing efforts to capture investor capital.
Our simplified approach in Relative Performance Stock Betting (RPSB) is an approach which allows individuals to bet which of two stocks will outperform the other in an agreed period. It is proposed that a DoBetter Club be formed and that the Club, acting as a broker, will attempt to arrange for counterparties for the bets members wish to make.
Prior postings in arthurlipper.com have described the type of bets, bettors, and details of the operations of the DoBetter Club, including a statistical service which will be useful for all investors, being interested in betting or not. Those interested in learning more should contact me as below.
Arthur Lipper, Chairman arthurlipper@gmail.com
British Far East Holdings Ltd.