Continuation of Larry And Barry Discuss The Merits Of Relative Performance Stock Betting*
| Larry: | For an investment advisor to be taken seriously regarding a recommendation to purchase a stock, the price of the recommended stock should at least outperform the S&P 500 in any or all the 3 standard betting periods of 30, 90, or 180 days. |
| Barry: | Good point. The only question is the number of $200 betting units the advisor is prepared to bet. Indeed, the number of $200 bets should be influenced by the amount the advisor’s client is willing to risk by accepting the advisor’s advice. The terms of the advisor’s bet will indicate the advisor’s level of expectation of events prompting the anticipated performance. |
| Larry: | Yes, and really the advisor should be willing to bet that the recommended stock will outperform by some percentage of the S&P 500 because if it does not do significantly better than the market measure, why buy the stock? |
| Barry: | The service of the DoBetter Club will be to identify and arrange with Club members to prepare to bet as the counterparty on the S&P 500 by some increased percentage of the index’s performance. |
| Larry: | So, a bet could be the performance of the X stock versus 150% or 200% of the S&P 500 of the performance of the market measure by the end of the betting period. |
| Barry: | That would certainly be a more compelling advisor pitch than just a vague promise of the stook being a good investment. |
| Larry: | Yes, and a very good return for the advisor’s client in the case of the stock outperforming the index by at least the stipulated percentage. |
| Barry: | Theoretically, those involved in the public underwriting or private placement of a stock, as well as those believing they have significant insights regarding the selected stock that is not yet publicly recognized will have an edge.. |
| Larry: | The fact that no securities transactions are involved by the participants in relative performance betting provides opportunities not otherwise available were the bets to require stock transactions. |
| Barry: | There are lots of opportunities, and those applying judgement and having insights as to company events can profit well. |
Arthur Lipper, Chairman arthurlipper@gmail.com
British Far East Holdings Ltd.
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